Mortgage Loans and Interest Rates, Exams of Nursing

Download Mortgage Loans and Interest Rates and more Exams Nursing in PDF only on Docsity! NMLS SAFE EXAM Questions with Answers 2024 Primary Mortgage Market ✔ Where credit institutions originate loans C. The maximum the rate can increase over the life of the loan ✔ When an ARM has rate caps of 5/2/6, the 6 refers to what? A. The maximum rate increase at the initial adjustment B. The start rate for the loan C. The maximum the rate can increase over the life of the loan D. The rate maximum the rate can decrease over the life of the loan B. The borrower qualified at the buydown rate ✔ When utilizing a temporary buydown to lower the interest rate on a FHA loan, which of the following are correct A. The borrower qualified at the note rate B. The borrower qualified at the buydown rate C. The rate cannot be more than 2% below the note rate D. Seller or builder can pay the discount points to buydown the rate A. Age ✔ All of the following are violations of the Fair Housing Act EXCEPT A. Age B. National Origin C. Disability D.Religion Encrumbrance ✔ Claim against property held by one who is not the legal owner Trigger Term ✔ Advertised term that requires additional disclosures Advertising Disclosure ✔ An advertisement must be presented "clearly and conspicuously" to keep from being deceptive, unfair, or otherwise violate a Commission rule Waving Right of Rescission ✔ Extenuating circumstances such as "bona fide personal financial emergency Right of Rescission ✔ Right that borrowers have to cancel a loan or line of credit with a lender within three days of closing Business Day ✔ When creditors office is open to the public, a calendar working day except Sunday or a federal holiday Application ✔ Financial information used for purposes of obtaining an extension of credit Disclosure ✔ The act of making new information known FTC Federal Trade Commission ✔ Mission is to promote consumer protection and eliminate and prevent anticompetitive business practices CFPB Consumer Financial Protection Bureau ✔ Regulatory agency charged with overseeing financial products and services offered to consumers TILA Truth in Lending Act ✔ Enacted 1968 promotes the informed use of consumer credit by requiring disclosures about terms and costs and standardizes the manner in which costs with borrowing are calculated and disclosed Per Diem Interest ✔ Interest charged on a loan for one or more days Annual Interest Rate Formula ✔ Principal (X) Interest Rate = Annual Interest Rate Interest Only Mortgage ✔ Mortgage where the mortgagor is only required to pay off the interest that arises from the principal that is borrowed for a set period Permanent Buydown ✔ Borrower chooses to pay additional "discount points" to buy down the interest rate for the life of the mortgage note 2/1 Buydown ✔ Used on fixed rate loans over two years Set of two initial temporary-start interest rates that increase in stair-step fashion until a permanent interest rate is reached Cost of Fund Index ✔ Regional average of interest expenses incurred by financial institutions which in turn is used as a base for calculating variable rate loans ARM Adjustable Rate Mortgage ✔ Loan that is lower than fixed rate in beginning Loan payment changes over time Adjustable caps that vary Used to obtain a higher loan amount Fixed Rate ✔ Interest rate that remains the same over the life of the loan Non-Conforming Loan ✔ Does not meet Freddie Mac or Fannie Mae guidelines Conforming Loan ✔ Conforms to terms and conditions set by government Conventional Loan ✔ Not guaranteed or insured by the government but can still follow federal guidelines Acceleration Clause ✔ Accelerated loan repayment if property is in default Exculpatory Clause ✔ Relieves one party form liability due to actions of another party Defeasance Clause ✔ Creditor can obtain title without foreclosure process Late Payement Penalty ✔ When fees are attached to late payment Pre-Payment Penalty ✔ Fixed sum added to loan if loan is paid off early Contract of Deed ✔ Complete financing and sales contract agreed upon by seller and seller with no note attached Note ✔ Promise to repay debt Mortgage ✔ Pledge of collateral to secure a loan Reconveyance ✔ A document issued by a mortgage holder indicating that the borrower is released from the mortgage debt and transfers the property title from the lender Conveyance ✔ The act of transferring an ownership interest in real property from one party to another Mortgage Lock-In-Rate ✔ A guarantee a lender will deliver a specific combination of interest rate and points if the mortgage closes by a specified date Approval letter ✔ A document that states the loan amount a lender is willing to make a borrower Pre-Qualification Letter ✔ Estimate of loan amount a borrower can get with limited financial information Commitment Letter ✔ Indicates a borrower has passed lenders underwriting guidelines and that they are willing to offer the borrower a home loan Mortgage Approval Letter ✔ Letter subject to property specified for a loan and dependent on an appraisal AUS Automated Underwriting System ✔ A computer generated loan underwriting decision, using completed loan application information Capacity ✔ A borrowers income assets Credit ✔ The ability of a borrower to obtain goods or services before payment, based on the trust that payment will be made in the future Collateral ✔ Property a borrower can provide as security for a loan Income Verification ✔ Provides verification a borrower has the means for repayment of debt Infile Credit Report ✔ One national credit bureau report Tri-Credit Report ✔ All three credit bureau reports Factual Data Credit Report ✔ two or three credit bureau reports Credit Bureau ✔ Clearinghouse that exchanges information with credit grantors about a borrowers bill paying habits and history 1004 Market Conditions Addendum ✔ Designed to enhance the transparency of the market trends, conditions and conclusions made by the appraiser Appraisal Approaches ✔ Sales Comparison/Market Data Cost Income Appraisal ✔ Estimate of a properties value FNMA Fannie Mae Loan Application ✔ A 1003 document requires originator to provide unique loan originator identifier provided by NMLS phone number, company ID and company address Ways to obtain a Loan Application ✔ Face to Face Internet Mail/Fax Telephone Loan Application ✔ Basis for entire loan package A legal document FEMA Federal Emergency Management Agency ✔ Coordinates the response to a disaster that has occurred in the United States NFIA National Flood Insurance Act ✔ In acted 1968 after hurricane Betsy ✔ An agency of the U.S. government that monitors and audits government spending and operations Title XIV, 14 Dodd-Frank ✔ Establishes minimum standards for all mortgage products Requires all originators to be properly qualified, registered and licensed TILA Regulation 129(c) ✔ This requires creditors to determine a consumer's ability to repay a "residential mortgage loan" and establishes new rules and prohibitions on prepayment penalties. ATR Ability to Repay Regulation Z 1026.43(c) ✔ Determines whether the creditor makes a reasonable and good faith determination at or before. consummation that the consumer will have a reasonable ability to repay the loan according to its terms FTCA Federal Trade Commission Act ✔ Outlaws unfair methods of competition and outlaws unfair acts or practices that affect commerce Safe Harbor Presumption ✔ A borrower is unable to challenge whether the lender met its "ability to repay" obligations Rebuttable Presumption ✔ The borrower has the ability to raise a legal challenge but must overcome the legal presumption that the lender complied with this obligation Average Prime Offer Rate ✔ Rate higher than a benchmark rate TILA Appraisal Regulations 129E ✔ Prohibits misuse of appraisals, influencing appraiser and withholding payment for an appraisal HOEPA Home Ownership and Equity Protection Act ✔ Enacted in 1994 as an amendment to the Truth in Lending Act (TILA) to address abusive practices in refinances and closed-end home equity loans with high interest rates or high fees RESPA Real Estate Settlement Procedures Act ✔ This was designed to protect potential homeowners and enable them to become more intelligent consumers. It requires that lenders provide greater amounts of information to prospective borrowers at certain points in the loan settlement process Regulation X ✔ The Real Estate Settlement Procedures Act (RESPA), is covered under this regulation 2604 ✔ The Home Loan Toolkit is covered under this section of RESPA GFE Good Faith Estimate ✔ This document includes the breakdown of approximate payments due upon the closing of a mortgage loan HUD-1 Uniform Settlement Statement Section 2603 ✔ A standard form used to itemize services and fees charged to the borrower by the lender or broker when applying for a loan for the purpose of purchasing or refinancing real estate HUD-1 ✔ The final disclosure of settlement costs provided to the borrower at closing Mortgage Serving Disclosure Statement ✔ Discloses to the borrower whether the lender intends to service the loan or transfer it to another lender Notices of Transfer of Loan Servicing ✔ Each transferor servicer and transferee servicer of any mortgage loan shall provide to the borrower a notice of transfer for any assignment, sale, or transfer of the servicing of the mortgage loan 1024.33 ✔ Section under RESPA for mortgage servicing transfers Notice of Inquiry ✔ If any servicer of a federally related mortgage loan receives a qualified written request from the borrower for information relating to the servicing of such loan, the servicer shall provide a written response acknowledging receipt of the correspondence within 5 days Kickback ✔ An illegal fee or rebate paid to someone in order to gain that person's decision or recommendation for the award of business ABA Affiliated Business Arrangement ✔ Under RESPA, an arrangement where a person refers mortgage-related business to a company in which the person "or an associate of such person" has an ownership interest of more than 1 percent in a provider of settlement services. Associate ✔ A spouse, parent, or child of such person; A corporation or business entity that controls, is controlled by, or is under common control with such person; An employer, officer, director , partner, franchisor, or franchisee of such person; or Anyone who has an agreement, arrangement, or understanding, with such person, the purpose or substantial effect of which is to enable the person in a position to refer settlement business to benefit financially from the referrals of such business. CBA Controlled Business Arrangement ✔ A real estate brokerage office that provides related services through subsidiary companies that operate within the brokerage office Sham Business Arrangement ✔ A business arrangement set-up for the purpose of paying illegal kickbacks or referral fees ECOA Equal Credit Opportunity Act ✔ Enacted in 1974,makes it unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction, on the basis of race, color, religion, national origin, sex, marital status, or age HDMA Home Mortgage Disclosure Act Regulation C ✔ Federal law enacted in 1975 that requires certain financial institutions to provide mortgage data to the public. Grew out of a concern of credit shortages in urban areas Redlining ✔ Any "personally identifiable financial information" that a financial institution collects about an individual in connection with providing a financial product or service that is not public FTC 16 CFR Part 314: ✔ Standards for safeguarding customer information AML Anti-Money Laundry Program ✔ Refers to a set of procedures, laws or regulations designed to stop the practice of generating income through illegal actions Patriot Act Disclosure ✔ Patriot Act Information Form Patriot Act Identification Form Patriot Act Identification Form for Entities or Organizations CIP Customer Identification Program ✔ Requirement, where financial institutions need to verify the identity of individuals wishing to conduct financial transactions with them and is a provision of the USA Patriot Act 5 years ✔ How long do records have to be kept for Patriot Act FACTA Disposal Rule 2003 ✔ Requires appropriate measures to dispose of sensitive information derived from consumer reports TCPA Telephone Consumer Protection Act ✔ Rule prohibiting telephone solicitation calls to a residence before 8:00 am or after 9:00 pm, regulates telemarketing calls. It also is the authority to create the National Do-Not-Call List 18 months with established relationship such as purchase 90 days after an inquiry is made ✔ Time periods under TCPA, Telephone Consumer Protection Act that a person can be contacted MARS Mortgage Assistance Relief Services ✔ Enacted 2010, directed at companies that offer loan modification services to consumers for a fee; it requires certain disclosures and prohibits upfront fees. Non-Traditional Mortgages ✔ Mortgages include interest-only mortgages, adjustable rate mortgages (ARMs) and subprime mortgages Amortization ✔ A term that refers to the process of allocating the cost of an intangible asset over a period of time. It also refers to the repayment of loan principal over time. Negative Amortization ✔ An increase in the principal balance of a loan caused by making payments that fail to cover the interest due LTV Loan to Value Ratio ✔ Ratio used by lenders to express the ratio of a loan to the value of an asset purchased DTI Debt to Income Ratio ✔ Ratio lenders use to measure an individual's ability to manage monthly payment and repay debts CMT Constant Maturity Treasury Rate ✔ An adjustment for equivalent maturity, used by the Federal Reserve Board to compute an index based on the average yield of various Treasury securities maturing at different periods LIBOR IntercontinentalExchange London Interbank Offered Rate ✔ A benchmark rate that some of the world's leading banks charge each other for short-term loans COFI Cost of Funds Index ✔ A regional average of interest expenses incurred by financial institutions, which in turn is used as a base for calculating variable rate loans CMT Constant Maturity Treasury ✔ The 12-month moving average used as an index for adjustable rate mortgages Predatory Lending FTCA Section 5 ✔ Lending practice that imposes unfair or abusive loan terms on a borrower. It is also any practice that convinces a borrower to accept unfair terms through deceptive, coercive, exploitative or unscrupulous actions for a loan that a borrower doesn't need, doesn't want or can't afford Hard Money Loan ✔ A specific type of asset-based loan financing through which a borrower receives funds secured by real property which the LTV is 65-70% Risk Layering ✔ Relaxing more than one traditional underwriting standards which increases the risk of defalt Piggyback Loan ✔ When a borrower takes out two loans simultaneously which lowers equity and increases credit risk Introductory Rate ✔ Interest rate charged to a customer during the initial stages of a loan Temporary Buydown ✔ A mortgage loan option through which a home buyer gets his or her interest payments temporarily reduced for the first few years of the loan Interest Only Mortgage ✔ A type of mortgage in which the mortgagor is only required to pay off the interest that arises from the principal that is borrowed ARM Adjustment Rate Mortgage ✔ Mortgage which allows the borrower to choose between several monthly payment options: a 30 or 40-year fully amortizing payment, a 15-year fully amortizing payment, an interest-only payment, a minimum payment or any amount greater than the minimum payment. Recast ✔ Involves paying off a lump sum of the principal amount and asking to have the monthly payments reset according to the original interest rate and loan terms Hard Penalty ✔ A prepayment penalty assessed if the mortgage is prepaid within a certain time period Soft Penalty ✔ A prepayment penalty that applies to refinancing only is called a Chunking ✔ Starts as a seminar or program where the scam artist pitches real estate investments to an investor and uses their personal information to obtain mortgages. Foreclosure Rescue Scheme ✔ Offers to help a homeowner in financial difficulty refinance their loan or obtain a mortgage modification to avoid foreclosures but doesn't deliver in the end, leaving the homeowner in even worse financial shape than before Property Flipping ✔ A recently acquired property is resold for a considerable profit with an artificially inflated value Silent Second Mortgage ✔ A secondary mortgage placed on an asset that is not disclosed to the lender of the original loan Backwards Application ✔ Fabrications of a borrower's income and assets to meet the loan's minimum application requirements through inflated income, fictitious assets, and altered credit reports. Title 18, section 1010 ✔ HUD Title number that fraud punishments are under FERA Fraud Enforcement and Recovery Act ✔ Law that enhanced criminal enforcement of federal fraud laws, enacted 2009 Power of Attorney ✔ The authority to act for another person in specified or all legal or financial matters Regulation V ✔ Regulation covering Fair Credit Reporting Act (FCRA) ✔ ECOA - Reg B " Be Equal" HMDA - Reg C " C you at Home" RESPA - Reg X " Xray of my RESPAratory system" TILA - Reg Z " Today I Learned About Zebra's " $5,000 or prison for 1 year or both ✔ Iff someone willfully gives false information or consistently understates the APR or fails to comply with TILA the fine is ✔ 3/7/3 Rule 3 - Give the form 3 business days after application and only collect the cost of a credit report in 1st three days 7 - Wait 7 days to close 3- If anything changes provide another form and wait 3 days to close loan. Redisclose ✔ If the APR changes by more than .125% on a fixed rate loan or by .25% on an ARM you must Primary Residence Refinance, HELOC, Equity Loan ✔ There is only rescission in a The Margin on an ARM ✔ Is set by the lender and never changes Index ✔ This is tied to the market Fully Index Rate Formula ✔ M+I=R Caps ✔ Protects borrowers from huge swings in the market 2 ✔ What the most a loan with 2/6 cap can increase in an adjustment period Mortgage Lenders make loans and Mortgage Brokers arrange loans ✔ Difference between mortgage lender and mortgage broker An MLO of a non-depository firm that arranges mortgages for clients ✔ What type of MLO must be licensed? ✔ Have Prelicensing Education of 20 hours minimum > 3 hrs Fed Law > 3 hrs Ethics/Fraud > 2 hrs non traditional Mortgage Products Convicted for breach of trust within prior 15 years ✔ Which of the following would be grounds for denying a license? No waiting period ✔ How long is the waiting period for a person who seeks to license as an MLO if a prior felony was pardoned? SAFE Act ✔ Frank is a MLO that is neither registered nor licensed, but he has more than 20 years experience as a mortgage broker. If he continues his loan origination activities, Frank would be in violation of what law? Revoke an MLO's Unique Identifier ✔ The states have the authority to ✔ NMLS has no authority to press charges or fine you SRP Service Release Premium ✔ When loans are sold in the secondary market, the entities who purchase them pay a premium over and above the outstanding balance is called MBS Mortgage Backed Securities ✔ Are a product of the secondary market Yes ✔ If a neighbor's tree is leaning over the property line, is it considered encroachment Lender ✔ Mortgagee / Trustee is the Borrower ✔ Mortgagor/ Trustor is the Leverage ✔ Term for borrowing money to purchase Hypothecation ✔ Another term for pledging collateral Deed of Trust ✔ In a Title State, the lending institution holds title to the property in the name of the borrower Trustor to the trustee ✔ In a deed of trust, the power of sale in the event of default is given from the Contract of Deed ✔ A complete financing agreement and sales contract in one executed document IRRRL - Interest rate reduction refinance loan USDA Loan ✔ >100% financing > Only offered in rural areas (Towns with a population of 35,000 or less) > Guarantee fee is 1% - which can be financed in the loan which means the max LTV is 101% ARM Loan ✔ > Start Rate (Teaser) - Lower introductory rate > An Index - which is tied to the loan (LIBOR, T - Bill, COFI) LIBOR -London Interbank Offered Rate COFI - Cost of Funds Index MTA -monthly Treasury Average T-bill - Treasury Bill M + I = R ( fully indexed rate) ✔ How to compute the Fully Indexed Rate on an ARM (2) Represents how much the loan can adjust in any adjustment period (6) Represents how much the loan may adjust over its life ✔ 2/6 Cap 2/1/6 Cap ✔ (2) Represents the first adjustment max (1) Represents all other adjustment periods (6) max adjustment over term of loan 5/1 ARM ✔ (5) is number of years fixed (1) Adjusts annually ✔ A borrower takes out a 7/1 ARM with 2/1/6 caps and a start rate of 3.5%. The margin is 4% and the loan is for $200,000 on a 30 year term. The index is based on the LIBOR. What is the Maximum rate this borrower will ever see? 9.5% ( take max cap and add to start rate) How many years is this loan fixed and at what rate? 7 years at 3.5% When this loan starts adjusting, how many times will this loan adjust in a 12 month period? Once annually Ballon Mortgages ✔ More popular in higher rate times for subprime borrowers as they shorter term provided a lower rate and payment RAM Reverse Annuity Mortgage ✔ > Must be 62 yrs or older > LTV is based on your age - the older you are the higher the LTV > Borrowers must demonstrate the ability to pay taxes and insurance on property. Borrowers who do not qualify under HOA and Real Estate Taxes (and Insurance) ✔ What is the borrower of a HECM loan required to pay? Certify construction is complete. ✔ An Appraiser must visit the property and complete a form 442 (FHLMC) or a 1004D (FNMA) to Interest only ✔ A Construction loan requires payment of: Variable Rate ✔ What type of loan has a rate of 5% for 5 years and a rate at 6% for the remaining 25 years? No-bid loan ✔ What type of loan cannot be required to be repurchased? Blanket Loan ✔ A loan that encumbers multiple properties is called a Mortgagee Clause ✔ Lender must be added to the insurance policy as the "LOSS PAYEE" PMI Private Mortgage Insurance ✔ Automatically drops off at 78% LTV or 22% equity position as required by Homeowners Protection Act ( HPA ) $117.50 ✔ If the premium was .94 % on a $150,000 loan, what is the monthly cost of PMI? NFIP National Flood Insurance Program ✔ Identifies floodplains and maps thru FEMA 100% of Dwelling ✔ What amount does Flood Insurance Cover? 80% ✔ What is the minimum amount of flood insurance required? Seperated ✔ What can you not refer to the borrower as on an application? SUM ✔ you may only ask if a borrower is Separated Unmarried Married 2 Years ✔ Min number of years employment and residence history needed on a 1003? Name of creditor/ monthly payment/ unpaid balance ✔ What information is collected in the assets and liability section > attest to the truthfulness of the document > expresses how the application was taken and who the MLO is employed by ✔ What is the significance of having the MLO sign the last page of the 1003? ✔ MLO's must place their NMLS Unique Identifier ( number) on all applications and all documents you provide to borrowers to include advertisements, this includes business cards Section 10 (X) ✔ Is where you would collect the Government Monitoring Information that is required by HMDA If application was taken 'face to face' then the MLO must write the words "Visual Observation" above their declination to answer and guess. ✔ If a borrower chooses not to provide the Gov't monitoring answers, what is the MLO's responsibility? Start a new application ✔ If an MLO starts an application and then leaves employment and the lender reassigns the loan to a different MLO. What should the new MLO do? URAR Uniform Residential Appraisal Report ✔ This was created to allow for standard reporting and analysis of single-family dwellings 442 or 1004d ✔ What form does an appraiser use to certify construction is complete? get monthly. TRID TILA RESPA Integrated Disclosure ✔ " Know before you Owe'" rule which Integrated RESPA and TILA's upfront disclosures and is commonly know as TIL and GFE ✔ The Know before you owe rule (TRID) integrated which 2 upfront disclosures? TILA Truth in Lending Act ✔ Is part of the Federal Consumer Protection Act and lays out disclosure requirements, advertising requirements as well as rights of rescission and penalties for violation TILA Truth in Lending Act ✔ Businesses who regularly extend credit to consumers for personal or family use where installment payments are made with finance charges must comply with ✔ October of 2015 the CFPB's Know before you Owe Rule known commonly as the TILA RESPA Integrated Disclosure Rule ( TRID ) went into effect and consolidated the TIL DIsclosure under TILA and the GFE under RESPA and created the Loan EStimate ( LE ). In addition the Closing Disclosure( CD ) replaced the HUD 1 Settlement. Loan Estimate ✔ Needs to be given to the borrower within 3 business days of application for all mortgages subject to RESPA-purchase and refi (excludes HELOCs, HECM and Chattels) Loan Estimate ✔ This document accomplishes the goal of both RESPA and TILA that pertains to educating borrowers of all the closing costs associated with the loan transaction Adding a HELOC to your primary residence ✔ Which of the following Loans would not require a Loan Estimate under the TRID rules? 3/7/3 rule ✔ >give the form within 3 business days after application and only collect the cost of a credit report in 1st three days >must wait 7 days from application to close >the Loan Estimate has very specific tolerance requirements -if anything changes that is considered to be a "qualified change of circumstance" lenders are allowed to issue another form but must wait 3 days to close. 1.) name 2.) Address 3.) ss# 4.) gross monthly income 5.) est property value 6.) amount of mortgage they are seeking you may not require a borrower to provide additional documentation ✔ 6 items that would make it an application under the TILA/RESPA Integrated Disclosure rules, lenders and brokers are require you to provide a Loan Estimate if they have the following information: 3 Years ✔ In cases where a mortgage broker is originating the loan the mortgage broker may provide the Loan Estimate on behalf of the creditor and would be responsible for maintaining proof of compliance for APR Annual Percentage Rate ✔ This is the TOTAL cost of the loan after all closing costs are taken into consideration disclosed to the borrower in the form of an interest rate TIP Total interest percentage ✔ This the total interest paid over the life of the loan as a percentage of the amount borrowed (take the finance charges given and divide into the loan amount to get % of interest paid over the term as a percentage of the loan amount ) $85,560/120,000 71.4% ✔ A borrower takes a loan of $120,000 at 4% interest for 30 years. The total finance charges of the loan, if the loan fully amortizes is $85,560. What is the TIP which will be disclosed on the Loan Estimate? $571 x 360 =$205,560 - $120,00 loan amount = $85,560 Finance Charge. Then divide $85,560/$120,000 = 71.3% ✔ A borrower take as 30 year loan of $120,00 at 4% interest, the Princ and Int payment is $571. Calculate the TIP required to be disclosed to the borrower? Finance Charge ✔ The cost of credit in the form of an exact dollar amount >Escrow deposits > Daily Interest > Homeowners Insurance > 3rd party charges where the lender allows borrower to shop for their own services ✔ Things that can change: > Required services the lender allows the borrower to shop for where borrower selects from a list. > Title services (lenders and owners policy) > recording Fee's ✔ Fee's that can change by 10%: ( 3rd Party Fee's) > Origination charges > Points ( after the loan is locked) ✔ Not allowed to change:( Lender and broker fee's) ✔ Keep in mind, no fee's may may be charged for preparing any documents required by law. ✔ Reissue of a Loan Estimate is only for a Qualified change of circumstance ( this includes borrowers saying one thing and once documented, the information is incorrect such as income, etc. If a revision is necessary, it mustbe provided within 3 days of receiving new info and documentation supporting the revision must be kept for 3 years. 1.) CHARM Booklet - Consumer handbook on Adjustable Rate Mortgages 2.) Program disclosure for whatever ARM they show interest in accepting ✔ Disclosures for Variable or Adjustable Rate Loans: Worst rate and payment a borrower will see on a an ARM in the first 5 years ✔ Lenders must disclose two things in reference to an ARM loan, what are they? c. Excluding consumer debt and servicing loans d. Buying payment instruments ✔ The CFPB regulates "covered persons" who engage in offering or providing "consumer financial services or 30 products" These include: ✔ Dodd Frank repealed HVCC and imposed Appraisal Independence Mischaracterizing the value, trying to influence, coercing an appraiser or threatening to withhold payment is prohibited. ✔ MLO's are prohibited from doing these to appraisers ✔ No MLO can receive compensation that is based on the terms of the loan ( rate, type) except the amount of the loan. No, they can be paid by either but not by both. ✔ Can an MLO be paid by both the client and another source for originating the loan? ✔ No loans where a borrower lacks the reasonable ability to repay ATR ( No stated Income loans ) Steering clients away from a "qualified mortgage" into a non qualified mortgage is prohibited Property Value ✔ Which of the following is not considered when evaluating the Ability to Repay? Qualified Mortgage ✔ Think plain vanilla 30 yr fixed or standard fully amortized ARMS, QM loans may not have negative-amortization, interest-only, or balloon-payment features or terms that exceed 30 years. They also may not have points and fees that exceed the specified limits ( max points and fee's of 3% ) loans under $100k have higher allowances, max DTI is 43% ✔ Only Fixed rate loans may have a prepayment penalty that cannot exceed 3yrs or 2% - penalty max is 2% for 1st 2 years and 1% for 3rd year. If you offer a loan with PPP you must also offer a loan without. 2% of the outstanding loan amount during the first year of the loan ✔ Pre payment penalties, when allowed per Dodd/Frank cannot exceed? The fully indexed rate or introductory rate whichever is higher ✔ When calculating ATR ( Ability to Repay) on an ARM loan lenders must use 3 Years after loan is closed ✔ Document retention for ATR/Qm Rules is ✔ HOEPA is the Home Ownership Equity Protection Act aka Section 32 which deals with High Cost Mortgages ✔ HOEPA only applies to primary residence loans. When you originate a high cost mortgage, you must give the borrower additional disclosures 3 days prior to closing, avoid certain loan terms and ensure the borrower receives additional protections, including homeownership counseling. 1.) Points and Fees Trigger ( excluding Mortgage Insurance)- if the total points and fee's , not including bonafide 3rd party fees 2.) APR Trigger - if your APR is 6.5% over the APOR - "average prime offer rate" for comparable 1st mortgages and 8.5% over APOR on 2nds or 1st liens under $50k 3.) Prepayment Penalty of longer than 3 years or more than 2% of the loan amount ✔ There are 3 reasons your loan becomes High Cost ● 3 days prior to close you must send a written High Cost Mortgage Disclosure ● Homeownership Counseling is required prior to making the loan from a HUD approved counselor. ● No Balloon payment loans ( except bridge loans ), Negative am, Prepayment Penalties , acceleration clauses ( unless a borrower commits fraud or is in default) , Paying a contractor directly from funds and of course, lenders are prohibited from encouraging a borrower to default. ✔ If you create a high cost mortgage you must comply with the following rules: D. All of the above ✔ Each of the following statements are correct regarding High Cost (section 32) loans, a. Negative amortization is prohibited b. The interest rate of the loan cannot be increased if the loan goes into default c. Balloon payments are prohibited for loans of less than five years D. All of the above Higher Priced Mortgage Loans ✔ A loan that has an APR that exceeds the APOR by 1.5% on a 1st mortgage 2.5% on Jumbos and 3.5 on junior mortgages 5 years or until loan is paid off After 5 years the borrower requests it to be canceled, however LTV must be under 80% of the ORIGINAL Value and the borrower cannot be delinquent. ✔ Under the TILA HPM escrow rule, lenders are required to establish and maintain an escrow account for borrowers who accept a first lien higher priced mortgage loan for a minimum 3 Days ✔ Appraisals are required and must be provided to borrowers how many days before closing It's a construction loan ✔ Higher-Priced Mortgage Loans must have an Escrow account except when? > 1-4 family dwellings > Condos > Manufactured housing (must be placed on a lot that the consumer owns) ✔ CFPB has oversight on RESPA Protects borrowers on Real Estate Loans: > Educate borrowers on costs associated with loan (provide Loan Estimate) > Eliminates kickbacks and referral fee's (section 8) > Establishes rules for escrow ✔ Purpose of RESPA: ✔ Documents associated with RESPA: All borrowers who apply for a federally related mortgage must be given a written list of 10 HUD approved homeownership counseling organizations in their area within 3 business days of application. There is no requirement for the borrower to take counseling however to obtain their loan. ✔ Special Information Booklet > Provide to Purchase applicants only > Must provide at application but no later than 3 business days of application ( unless denied within the 3 days), if a borrower is using a mortgage broker the broker must provide the booklet ( entitled 'Your Home Loan Toolkit') GFE Good Faith Estimate ✔ This form is required on the following loan types: HELOC's, Reverse, Chattel (secured by mobile home not attached to land) ✔ The Equal Credit Opportunity Act (ECOA) prohibits credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age, or whether you get public assistance. Creditors may ask you for most of this information in certain situations, but they may not use it when deciding whether to give you credit or when setting the terms of your credit. They are never allowed to ask your religion. Everyone who participates in the decision to grant credit or in setting the terms of that credit, including real estate brokers who arrange financing, must follow the provisions of the ECOA. Never ✔ When is it okay to ask of a woman's childbearing capabilities or whether or not there are intentions to have additional children. ✔ Public assisted income - if the income is not enough or the borrower will not have continuity of the income or does not meet the qualifying ratios, the borrower can be turned down just like any other borrower. Ignore that the applicant is pregnant ✔ At application the MLO notices the borrower is pregnant; they should: > discouraging a borrower from applying > refusing a loan to someone who qualifies > lending with diff terms than someone with the same credit/income criteria > closing an account >Appraisers/Lenders are prohibited from discrimination in home valuation based on a prohibited factor. ✔ Lenders and Brokers are prohibited from doing any of the following based on the protected class: ✔ Consumers who feel a lender has discriminated in an application may file complaint with the FTC ✔ A Notice of Adverse Action (statement of reasons for denial) must be given to any borrower who is denied a loan. ✔ A lender has 30 days to render a decision. Incomplete applications must get a notice as well to inform them of the needed documents. ✔ In borrower/co borrower application - only 1 person ( the primary applicant ) needs to be sent an adverse action letter. ✔ In an adverse action letter if denied for credit - the lender must supply the borrower with the CRA's name and contact info - as well as alternative credit agencies - Credit score is not required to be disclosed on the denial letter, as it is disclosed upfront ✔ Credit line increases on an already established line of credit do not require a Notice of adverse action ECOA Valuations rule: ✔ Lenders have 3 days from application to notify a borrower of their right to a copy of their appraisal and lenders must provide promptly upon completion or at least 3 days prior to close whichever is earlier. Borrowers can waive the timing requirement and accept the appraisal at closing. If the loan does not close, and they signed a waiver you have 30 days to provide the applicant with a copy. Equal Credit Opportunity Act = 25 letters as well but if you can remember that or your b=2 e=5 then you can probably remember 25 months as well. ✔ Record keeping for ECOA - 25 months B Equal B -2nd letter of alpha and E 5th letter of alpha LAR Loan Application Register - Keep records for 3 years ✔ Every year lenders are required to report their loan activity - in this report they must give the disposition of each and every loan application taken. Report is due March 1 The report is called an ✔ Lenders are required to publish a notice to borrowers at their branches to advise the public that Government Monitoring information is collected. Visual Observation ✔ If the borrower chooses not to furnish Gov't Monitoring answers under HMDA in a face to face meeting what must the MLO use to record this information? FCRA Fair Credit Reporting Act ✔ This law has significant responsibilities for Consumer Reporting Agencies and lesser for those who are not. FCRA Fair Credit Reporting Act ✔ This law requires creditors to provide accurate credit information to the CRA's . The CRA's have ultimate responsibility for protecting a borrower's credit information. FCRA Fair Credit Reporting Act ✔ This law gives you permission to pull a consumers report - you must have a "permissible purpose" ( ex: application or employment) ✔ Prescreened credit offers - are allowed under FCRA. Lenders have to request specific criteria from the CRA's and then offer a pre-approved credit offer based on those standards. > Consumers can opt out of getting offers for up 5 years by going to www.optoutprescreen.com FACTA Fair Credit Reporting Act ✔ Its purpose is to curb identity theft, improve customer dispute resolution, improve accuracy of consumer records. Credit score disclosure ✔ We are required under FACTA to disclose to our clients upfront in the application process what the range of available scores are and what their score was and the factors that adversely affected their score as well as the company who provided the score. Negative Information ✔ A borrower must be notified within 30 days of a creditor placing negative information on their credit file. This allows the consumer the ability to dispute the information in a more timely manner - lenders must resolve disputes within 30 days. Personal Checking Account ✔ What is considered to be a covered account according to FACTA ✔ Every company is required to have a written Red Flags Plan in place and each company plan will vary depending on the size/scope/ complexity of the organization. GLB Gramm Leach Bliley Act ✔ Put restrictions on Financial Institutions use of borrowers "non public personal information" and requires certain disclosure before sharing or selling. GLB Gramm Leach Bliley Act When the modification is complete ✔ When can a fee be charged for a loan modification under MARS ✔ Timeline for Document Retention 2yrs - TCPA 5yrs - RESPA ( 5 letters) 5yrs-Patriot Act (Pentagon) 25mo - ECOA 2nd letter of alpha is B and 5th letter is E 3yrs - ATR / LAR (HMDA Reg C) LE and CD under TRID ✔ The Safe Act Defines a Non Traditional Mortgage as anything other than a 30 year fixed rate loan. Interest Only ✔ Examples of nontraditional sub prime mortgage product era, sometimes referred to as exotic loans: ✔ NINA No Income No Asset loan SISA Stated Income Stated Asset ✔ 4 ways to pay ARM 1.) 30 yr payment 2.) 15 yr payment 3.) Interest Only 4.) Minimum Payment (negative amortization) D.) all of the above ✔ Which of the following is a risk associated with a nontraditional ARM? a.) the inclusion of a prepayment penalty b.) payment shock when amortizing begins c.) additional costs associated with reduced document loans d.) all of the above Loans with high delinquency or default rates ✔ What does subprime refer to? D.) based on LIBOR ✔ All of the following would be associated with a Subprime loan with the exception of which of the following: a.) Limited Documentation b.) High prepayment penalties c.) balloon payments d.) based on LIBOR ✔ Every licensee must implement best practices to manage loan product risk on a continuous basis as published by the CSBS and AARMR and NACCA simply known as the Guidance. ✔ The following practices are deserving of increased scrutiny due to higher than normal risk, to both the lender and to the borrower: • Collateral-Dependent Loans • Risk Layering • Reduced Documentation • Simultaneous Second-Lien Loans • Introductory Interest Rates • Lending to Subprime Borrowers • Non-Owner-Occupied Investor Loans ✔ The guidance is applicable to non-traditional, alternative or exotic mortgage loans, including "interest-only" mortgages and "payment-option" adjustable rate mortgages. These products allow borrowers to exchange lower payments during an initial period for higher payments during a later amortization period. c.) Charging higher rates to risky buyers ✔ Under The Guidance on Subprime Mortgage Loans , the CSBS considers all of the following to be a predatory lending practice except: a.) Basing a loan off the foreclosure value b.) Refinancing a borrower repeatedly to collect more fees c.) Charging higher rates to risky buyers d.) Using fraud or deception to sell the loan Payment Shock ✔ Payments on nontraditional loans can increase significantly when the loans begin to amortize. Commonly referred to as _________________ this is of particular concern for payment option ARMs ✔ Do not make decisions based an over-reliance of credit scores as a substitute for income verification in the underwriting process. ✔ Lenders are encouraged to manage their risk by ensuring UW standards are prudent including borrower's ability to repay and limit risk layering. Risk Layering ✔ Relaxing more than one of the traditional UW Standards - (No income verification and not escrowing for taxes and insurance doing a stated value, no documentation, high LTV is Fraud ✔ Is the intentional use of deceit that deprives someone of money, property or a legal right ✔ Warning signs of fraud usually layer on top of each other. Its suspicious to an UW who has an unfolded VOE or not time stamped from faxing, however that alone is not necessarily fraud. However, when coupled with fonts that vary in size or type on a W-2 the likelihood fraud exists is elevated from red flag to Suspicious enough to report. (D) wait to see if there is anymore suspicious activity ✔ An MLO takes an application and becomes suspicious of the applicants Soc Sec. #; what should the MLO do? (A) contact the police (B) deny loan (C) call soc sec admin and verify Soc Sec # (D) wait to see if there is anymore suspicious activity B). A Liability ✔ A young couple is applying for a loan for a new home purchase. A portion of their down payment is a loan from a Grandparent for $25,000. The money was already given to them and placed in their account three months prior to the loan application. The loan payments won't start for one year, how should the $25,000 be reported on the mortgage application? A. Asset B. A Liability C. Gift of funds D. Not reported at all A.) Ignore the situation as it may be a family matter ✔ What action should an MLO take if during a refinance involving a mother and son the MLO gets the feeling the mother is hesitant about the refinance? a.) Ignore the situation as it may be a family matter b.) Pull the mother aside to discuss c.) Refer the transaction to the AML department C. Sub Prime loans. D. VA loans. A. The lender will allow their lien to stay in second position. ✔ If a lender agrees to subordinate a loan, what has occured? A. The lender will allow their lien to stay in second position. B. The borrower has a late payment reflected on his credit report. C. A loan has been paid in full. D. A loan has been approved. 20% ✔ If the borrower has less than a _____ down payment, mortgage insurance is required. Usually, the lenders will submit the loan package to a mortgage guaranty insurer at the same time the lender is underwriting the loan. A.) Secondary Market ✔ Mortgage back securities are a product of which of the following? A. Secondary market. B. Primary market. C. Jumbo market. D. Stock market. C.) A refinance provision ✔ Nontraditional ARMs are considered the riskiest of loans when they include any of the following except. A. Low Doc programs. B. Rate caps. C. A refinance provision. D. Teaser programs. B.) FHA Loans ✔ Out of all the loans below, which has a mandatory MIP? A. All loans with less than 20% down payment. B. FHA loans. C. HELOC D. VA D.) Prepaid Finance Charge ✔ The acronym PFC stands for: A. Paid from closing. B. Prepayment penalty. C. Prequalification of credit. D. Prepaid Finance Charge. D.) VA Loans ✔ The below loan has an assumable clause: A. Jumbo loans. B. Conforming loans. C. FHA loans for low income families. D. VA loans. B.) Rate adjustments on adjustable rate programs ✔ The Cost of Funds Index is traditionally used to determine interest rates of what type of loans? A. 360 month mortgage-Fixed rates. B. Rate adjustments on adjustable rate programs. C. Reverse mortgage. D. HELOC B. MLS sold homes approach ✔ There are three usual approaches to determining the fair market value of a property: Which one does not belong? A. Income approach B. MLS sold homes approach. C. Cost approach. D. Sales approach. B. Reverse Annuity Mortgage ✔ This loan product is typically for borrowers over 62 years old who have built substantial equity or have paid their home in full and wish to cash out the equity in their home. A. Graduated Payment Mortgage. B. Reverse Annuity Mortgage. C. Home Equity Line of Credit. D. New Construction Loan. D. VA Funding Fee ✔ VA loans require which of the following? A. VA Value Certificate B. Flood insurance C. Pest inspection. D. VA Funding Fee B. Federal Housing Administration ✔ What entity insures FHA loans. A. Fair Housing Authority B. Federal Housing Administration C. First-time Homeowner's Act. D. None of the above. B. Existing Debt ✔ What factor do lenders analyze in order to determine if a borrower will be financially able to meet the demands of a loan repayment? A. Amount of the loan request B. Existing debt. C. LTV D. Length of the loans terms. D. Provide a source of funds for lenders ✔ What is FNMA's primary purpose in the secondary market? A. Fund loans once they are processed and closed. B. Underwrite a loan. C. Originate loans. D. Provide a source of funds for lenders. C. Insures Loans ✔ What is one of the many roles of the Federal Housing Administration? A. Approves loans. B. Gaurantees loans. C. Insures loans. D. Services loans. D. Index and Margin ✔ What is used to determine the interest rate change on an ARM? A. Index only. B. YSP. C. SRP D. Index and Margin. HECM ✔ When a borrower reaches 62 years of age and he has significant equity in his home, which of the following mortgage programs would best assist that person if he is in need of addictional living expenses, access to funds for home repair or other needs? HELOC HECM Swing-Loan ARM A. Non-Conforming ✔ Which of the following best defines a loan that doesn't meet the loan limits of FNMA and FHLMC? A. Non Conforming B. Conventional loans C. Subpriming loans ✔ HUD estimates that the new disclosures will reduce settlement costs by _____ per transaction. A. $250 B. $500 C. $700 D. $1000 C. Facilitate shopping ✔ Many of the changes to the RESPA rule are designed with what purpose in mind? A. Increase loan volume B. Reduce disclosure C. Facilitate shopping D. Clarify HVCC procedures A. Credit report fee ✔ Once the good faith estimate has been delevered, what is the only fee that can be collected for three business days? A. Credit report fee B. Appraisal fee, IF in compliance with HVCC C. Application fee D. No fee of any kind C. 1 Year in prison $10,000 fine ✔ What is the fine for a RESPA violation? A. 1 year in prison B. $7500 fine per violation C. 1 year in prison and a $10,000 fine. D. $25,000 and 6 months in prison. C. 0% ✔ What is the maximum that a disclosed origination charge can INCREASE? A. 10% B. 5% C. 0% D. .125% B. 10 days ✔ What is the minimum time the disclosure for settlement costs be valid? A. There is no time limit B. 10 days C. 15 days D. 30 days C. Bait and Switch ✔ What unethical practice is the new Good Faith Estimate designed to reduce? A. Redlining B. Flipping C. Bait and Switch D. Affinity Fraud D. Special information booklet ✔ . Which of the following is NOT a RESPA mandated disclosure? A. HUD-1 Settlement Statement B. Good faith estimate C. Regulation Z Disclosure D. Special information booklet. C. Verification of Delivery ✔ Which of the following items would NOT necessarily be needed in order to have a "GFE Application"? A. Property address B. Social Security Number C. Verification of Delivery D. All of the above are required for a GFE Application A. Housing credit needs ✔ One purpose of HMDA and Regulation C is to provide the public wth information that will help show whether financial institutions are serving the ________ of the neighborhoods and communities in which they are located. A. Housing credit needs B. Local banking needs C. Real estate market D. None of the above C. Visual observation ✔ Under the Home Mortgage Disclosure act, if information regarding the borrowers' ethnicity, race, and sex is not provided by the applicant and if the application is submitted in person, the lender is required to note the information on the basis of _________ or surname. A. Interviewer's opinion. B. Previous experience C. Visual observation. D. Employment status. D. A day where the creditor is customarily open to the public for carrying on substantially all of the creditor's business functions. ✔ For the initial disclosures, what is the definition of "business day?" A. Any day other than Sundays and recognized legal holidays. B. Monday through Friday. C. Any day other than bank holidays. D. A day where the creditor is customarily open to the public for carrying on substantially all of the creditor's business functions. A. 1/8% or .25% ✔ How much must the APR change on a loan for it to be required to redisclose? A. 1/8% B. .0025% C. 1% D. $350 or 1/4% whatever is less. B. Credit report fee. ✔ What fees may be collected prior to the 3 business day waiting period? A. Appraisal fee, as long as it goes to the appraiser at the door. B. Credit report fee. C. No fee may be collected before the 3 day waiting period D. Only reasonable, bona fide fees may be collected. B. Appraisal and fair market value practices ✔ Which one of these areas is not addressed by the agencies guidance on nontraditional mortgage guidance? A. Portfolio and risk management practices. B. Appraisal and fair market value practices C. Loan terms and underwriting standards D. Consumer protection issues. B. Size and complexity ✔ Because Red Flags is Risk Based, your program must be appropriate to the ________ and _______ of your business or organization and the nature and scope of its activities. A. Size and integrity B. Size and complexity C. Scale and integrity D. Size and proportion C. Red Flags. ✔ The potential patterns, practices, or specific activities indicating the possibility of identity theft are considered to be: A. FACTA violations B. FCRA Violations C. Red Flags. D. ECOA Rules D. 60 ✔ Federal law establishes a _____ day transfer period in which no late fees can be charged to a borrower who sends his or her payment to the original servicer, rather than the new one, before the payment's due date. A disclosure for every adjustable program in which the consumer expresses an interest. ✔ TILA requires two additional disclosures for ARMs on a consumers principle dwelling with a loan term greater than 12 months when the rate can change after the consummation of the loan. One disclosure is a booklet titled "Adjustable Rate Mortgages." The Second is? A. $500K or 1% of the lender's net worth ✔ Which of the following payments must be made by the lender in both individual and class action lawsuits for violations of the truth in Lending Act A. $500K or 1% of the lender's net worth B. $50K C. Actual damages D. 100K B. Consumer friendly ✔ While a lender does not have to advertise every single plan he or she offers, it is unlawful to conceal less _________ plans. A. Consumer driven B. Consumer friendly C. Lender offered D. Lender serviced C. Trigger ✔ While _____ terms require disclosures, general advertising terms do not, because they do not refer to repayment period length or down payment cost. A. Specific B. Non-specific C. Trigger D. Stock D. All of the above ✔ Regulation Z applies to businesses that extend credit if which of the following conditions are met: A. The credit is offered to consumers. B. The credit is subject to finance charge and payable in more than four installments. C. The credit is primarily for personal, family, or household purposes. D. All of the above D. Whichever of the above comes last. ✔ The borrower must notify the creditor of any intent to rescind on a loan by midnight of the third day after: A. Consummation of the loan. B. Delivery of the right to rescind. C. Delivery of disclosures. D. Whichever of the above comes last. C. Initiate an Adverse Action Notice ✔ A borrower is denied a loan request due to the credit score not meeting lender's guidelines, what must be done next? A. Borrower verbally informed. B. Mail a copy of credit with instructions to dispute scoring. C. Initiate an Adverse Action Notice D. Make counter offer of loan terms C. A mortgage broker pays a fee to a title company for services actually performed. ✔ All of the following violate RESPA except? A. A lender retains a portion of a fee paid to a surveyor for completion of a survey report. B. A mortgage broker agrees to pay a builder for the referral of the builders clients to the broker. C. A mortgage broker pays a fee to a title company for services actually performed. D. A mortgage broker accepts a fee for sending its customers to a specific real estates sales associates. B. Their race. ✔ Based upon Fair Lending Laws, you are only permitted to ask a loan applicant: A. If they intend to continue employment once they have children B. Their race. C. Their religion D. If they plan on having children. A. 90 days within receiving the Notice of Adverse Action ✔ Bob Jackson has recently been turned down for a loan request. He has paid for the appraisal and wants a copy of the appraisal. How many days days the consumer have to request a free copy. A. 90 days within receiving the Notice of Adverse Action B. Within 65 days of application C. Within 30 days after Bob receives his notice of his right to receive the appraisal. D. Within 15 days of the appraisal being performed. C. GFE and Settlement Statement ✔ When do borrowers get yield spread premium disclosures? A. For high cost loans on the section 32 disclosure. B. On application, TIL and the mortgage or note C. On GFE and Settlement Statements D. Only on refinance transactions. C. The GFE is a preview and estimate of the settlement costs and the HUD-1 reflects the actual costs of the settlement. ✔ Explain the difference between HUD-1 and GFE. A. HUD-1 shows an estimate of the settlement costs and the GFE offers the actual costs at settlement. B. The GFE and HUD-1 are the same documents with different titles. C. The GFE is a preview and estimate of the settlement costs and the HUD-1 reflects the actual costs of the settlement. D. Brokers and lenders are not required to provide the GFE or the HUD-1. B. Up to 30 years incarceration and a 1000K fine ✔ False information submitted by an applicant on a federally covered loan, the applicant's penalty may include? A. License revocation B. Up to 30 years incarceration and a 1000K fine C. A misdemeanor charge. D. Applicant placed on FBI watch list. D. The borrower's current asset information. ✔ Gramm-Leach-Bliley defines nonpublic information as? A. The assessed value of the subject property. B. The legal description or street address of the subject property C. Ownership history of subject property. D. The borrower's current asset information. C. Credit Score ✔ If a consumer is denied credit, the ECOA requires the lender to forward the Notice of Adverse Action. This notice provides all the following info except: A. Reason for denial. B. Information on the credit report agency used. C. Credit Score D. Description of the credit requested. B. ECOA ✔ If a creditor did not inform the borrower within 30 days of a credit decision that was considered an adverse action, the creditor violated which law or supporting regulations? A. RESPA B. ECOA C. FCRA D. TIL A. RESPA ✔ If a mortgage broker gives a real estate agent a gas card in the amount of $75 for the referral of a home buyer, which federal act was violated? A. RESPA B. ECOA C. Fair Housing Act D. FCRA B. FCRA C. TILA D. FHA A. To ensure applicants have equal access to credit. ✔ What is the primary purpose of ECOA? A. To ensure applicants have equal access to credit. B. To ensure credit info is reported equally. C. Requires disclosure of closing costs. D. Requires clear disclosure of credit terms. C. To ensure accuracy and fairness of credit reporting. ✔ What is the primary purpose of FCRA? A. Require credit reporting agencies purge old data. B. To ensure equal access to credit. C. To ensure accuracy and fairness of credit reporting. D. Requires clear disclosure of credit terms. D. Advance disclosure of closing costs and prohibitions on referral fees. ✔ What is the primary purpose of RESPA? A. Direct industry to standardized costs. B. Limit points and fees. C. Disclose to consumer the true cost of credit on a yearly basis. D. Advance disclosure of closing costs and prohibitions on referral fees. B. Prohibits discrimination in credit transactions. ✔ What is the purpose of regulation B? A. Eliminated splitting of fees. B. Prohibits discrimination in credit transactions. C. Requires disclosure of closing costs. D. Prohibits the charging of fees for the completion of the GFE and TILA forms. B. FCRA ✔ What law was created to ensure accurate credit information is used when making a credit decision? A. RESPA B. FCRA C. TIL D. ECOA A. Settlement statement ✔ When a mortgage company is earning YSP on the origination of a mortgage loan which disclosure indicates the amount? A. Settlement statement B. TIL disclosure C. Loan origination agreement required under federal law. D. Affiliated business arrangement disclosure A. Appraisal fees ✔ When calculating finance charges in compliance with the TILA, all of the following are included except. A. Appraisal fees B. Mortgage broker fees. C. PMI D. Settlement fees. D. HDMA ✔ Which law dictates that lenders who take 100 or more application a year report detailed info about their loan applicants and the applicant's demographic info? A. ECOA B. RESPA C. Privacy Act (GLB) D. HDMA D. Finance charge ✔ Which of the below is considered the "Cost of Credit" expressed in a dollar amount? A. LTV B. APR C. YSP D. Finance charge B. An applicant's marital status may lead to a change of employment. ✔ Which of the below responses would be a violation of an applicant's right under the Fair Lending Laws? A. The applicant's age is below the required age of executes a contract. B. An applicant's marital status may lead to a change of employment. C. Their income doesn't meet the requirement of the loan request. D. Applicant's credit history shows many late fees and defaults. C. A mortgage broker accepts a fee for sending its customers to a specific real estates sales associate ✔ Which of the following violates RESPA? A. A lender pays a fee to an appraiser for completion of an appraisal report. B. A mortgage broker receives indirect compensation in the form of yield spread premium for originating a loan at an interest rate in excess of the "par" interest C. A mortgage broker accepts a fee for sending its customers to a specific real estates sales associate. D. A mortgage broker pays a fee to a title company for the settlement of the loan. C. The broker. ✔ Who is responsible for providing the GFE to the borrower when the loan is originated by an entity that is acting as a mortgage broker? A. Both the lender and the broker. B. Only the lender C. The broker. D. The settlement agent. C. Within 30 days. ✔ Your loan applicant has a low credit score, when must you advise him of the status of his application? A. Within 3 days B. Within 3 business days C. Within 30 days. D. Within 30 business days. B. Fines of up to 10K and one year in prison. ✔ The penalties for paying or accepting an illegal referral fee are: A. Fines of up to $5k and one year in prison B. Fines of up to 10K and one year in prison. C. Fines of up to 10K and 3 years in prison D. Fines of up to 20K and one year in prison A. Mortgage broker fee. ✔ Finance charges always include which of the following? A. Mortgage broker fee. B. Title insurance charges. C. Document prep fees D. Credit Report Fee B. TIL Disclosure and promissory note ✔ A loan contains prepayment penalties, which of the following documents would a borrower review to confirm this? A. Deed of trust B. TIL Disclosure and promissory note C. HUD-1 and the GFE D. Mortgage Servicing Disclosure Mortgage broker fee ✔ Finance charges always include which of the following? Terms of the credit transaction ✔ Under the Truth-in-Lending Act, a mortgage professional is required to disclose ________ to a borrower. Finance charge ✔ Which of the following is defined as the cost of credit expressed as a dollar amount? A. Anyone with ownership interest in the property