NMLS Practice Questions Flashcards

Mortgage loan
Terms Definitions
Interest only has what feature?
They can be paid off faster than fully amortized.
What document provides information about the penalty for providing fraudulant answers on the 1003?
The Uniform Residential Loan App
What does Investors with non-recourse loans mean?
Borrower does not have any recourse on default
Without a waiver, an applicant for a conforming loan must be given a copy of the appraisal when?
At least 3 business days prior to closing
What is the prupose of RESPA?
To regulate closing costs
After the loan is sold to the secondary market, the originating lender may be required to purhase the loan back due to....
a buyback agreement
What is the variance allowed on adjustments for apprasisals according to Fannie Mae and Freddie Mac?
Whish type of loan processing woul include only an appraisal and a crdit score?
No documentation
A creditor failed to deliver the required TILA rescission notice and material disclosures. As a result the borrower's right to rescind was extended for how many years from the date of consumation of the transaction?
3 years
Under the Graham-Leech-Bliley Act, a person is considered a consumer of a financial institution when the person....
obtains credit from the financial institution for personal purposes
A copy of the appraisal is provided when?
At close of escrow
A conventional loan is a loan that
is nmot issued, insured, or guaranteed by a government huosing entity.
In the loan app process which of the documents refers to the shopping cart?
Good Faith Estimate
The 3 day right to rescission provided by Truth in Lending and Regulation Z applies to a loan
to refinance a loan from the same institution that fails to cover the unpaid balance of the prior loan plus closing costs
The Gramm-Leech-Bliley Act requires that financial institutions giuve consumers what period of time to opt out of allowing the sharing of their non-public personal information
No specified time but a reasonable opportunity
What is redlining?
Refusing to lend to a specific neighborhood
For an FHA loan, an acceptable source of a down payment is ....
a gift from a non-profit organization
Each loan originator is indentified in the NMLS database by...
unique  identifier
The federal regulation that implements the REal Estate Settlement Procedures Act is...
Regulation X
When a self-employed person is 25% owner of a business, which of the following documents needs to be reviwed to determine his loan qualifications?
Which of the following CANNOT be used to help pay the down payment for a buyer wanting an FHA loan?
a gift from the seller
The pricing model used for subprime loans has been?
risk based
Which of the following provide a guarantee against losses to a lender in the event of default on a residential mortgage loan?
A disocunt point is used for?
Buying down the interest rate for a charge
The rules relating to the Federal Trade Commission's "no call" registry allow calls to persons on a no call list are:
for up to 18 months after a business transaction has been completed with them
for up to 3 months after they have made an inquiry
Inclusion of the permium for single-premium creduit life insurance in the principal loan amount without the borrower's informed consent is one example of?
The cost of a loan is shown in the annual percentage rate in the?
TIL Disclosure Statement
What can be counted as income for self-emplyed borrowers?
A portion of each payment made on an uninsured loan without an escrow account is applied to?
interest and principal
Which law requires distribution of teh CHARM booklet to certain loan applicants?
truth in lending act
The practice of lenders refusing to provide financing to qualified applicants on reasonable terms and conditions due tot he geographic area in which the property is located is?
Which law is the Truth in Lending Act most closely related to?
An AR< rate adjustment will take into account what?
Index rate, margin, and cap
WHich charges have a no tolerance restriction?
transfer taxes
The interest rate for an ARM will change periodically based on?
its index and margin
A basis point is?
one-one hundreth of a percent
If a refinance is closing on 10/15 and the borrowers is not waiving their escrows, how many months of insurance can they collect?
depends upon the expiration date of the insurance company
What is the cost of having an impound account?
escrow waiver fee
What is considered the an illegal referal?
Lead generating company gets a percentage of loan amount on a closed deal
Regulation Z was issued to implement the Truth in Lending Act by?
The Board of Governors of the Federal Reserve System
A GFE contains?
estimated closing costs
Regulation X requires that the estimate of the charges and terms be available for what period of time after the GFE is provided?
10 business days
In qualifying the income ofa sole proprietor borrowerm the orginator should consider what?
Schedule C net income, plus on-cash expenses and depreciation
The HUD-1A settlement statement is designed for use when?
no seller is involved in the transaction
What should not be given to a consumer who applies for an ARM loan?
the interest rate upon the first adjustment
The 1003 included a section requesting info regarding government monitoring. Applicants must complete this section...
only if they wish
What does PUD stand for?
planned unit development
An Alt-A loan is a class of?
subprime loan
The TIL is not required on any business/commercial credit lines used for any?
business transaction
When is notice of adverse action requried when the borrower applies for a loan?
30 days
When is the appraisal disclosure required to be delivered?
when a complete app is taken
What part of the app process is the GFE required?
within 3 days of the complete app
RESPA does not require lender disclosures of closing costs and procedures for which home loans?
construction loans
A 3/1 ARM is?
a fixed period ARM
FHA requires a borrower to maintain hazard insurance of at least the lesser of
the loan balance or the replacement costs of the improvements
What disclosure would show if a loan is a balloon payment or not?
Truth in Lending
What is the margin?
teh amount the lender adds to a selected index rate
Who is the entity that administers RESPA?
Dept. of Housing
RESPA requires that the borrower be given which document at closing?
HUD-1 Settlement Statement
What is the type of loan an investor cannot come after the borrower?
APR consists of
the closign costs financed into the balance of the loan in an interest rate form
PFC means
Prepaid Finance Charges
What law regulates and sets limits on the origination fee?
A consumer has the right to inspect his HUD-1 settlement statement how many business days prior to closing?
What is used to reduce interest rates?
discount points
Who is the entity that administers RESPA?
Dept of Housing
Lien priority based on the respective dates of recording of the mortgages can be changed by a ?
subordination clause
What percentage variance is allowed in a fannie mae appraisal report is tolerable when dealing with comps without justification.
Borrower has a right to recieve apprasial within how many days?
What is the prupose for FHA?
To provide governement method for insuring mortgages
The Truth in Lending Disclosure statement shows?
finance charges
What is the main prupose of Fannie Mae and freddie mac?
to provide a source of funds for the mortgage lender
What is the defeasance clause?
states the lender will remove the lien when the debt is repaid
What charges have a 10% tolerance?
govt recording tolerances
In the sales comparison appraisal approach, the appraiser uses what as comparable sales?
recent sales in the area
When is an ALTA policy not needed?
When the is no lender involved
A real estate agent believes that his Asian client may prefer to live in a more diverse area and so only shows him the homes where there is a high concentratuion of Chinese. What is this agent guilty of?
What is the lowest payment option for an ARM?
the minimum payment
Test nortgage transfered servicing rights of some of his mortgage loans to Answer Mortgage. Test must send a servicing transfer statement to the affected borrowers how many days before the effective date of transfer?
What is a convertible ARM? What does it allow borrowers to do?
change from an adjustable rate to a fixed rate mortgage
How can one calculate the nummber of years it will take to recover the costs of refinancing a loan?
total costs/ monthly savings due to refinancing/ 12
What is the housing/ debt ratio for FHA loans?
31%housing/ 43% debt
What is COFI?
It shows the slow moving Cost of Funds Index
An appraisal that is appraised with a higher than market value appraisal results in an?
inflated appraisal
Which federal agency administers regulation B implementing ECOA, regulation C implementing HMDA, and regulation Z implementing TILA?
What is the minimum equity required to automatically eliminate MI?
What is the Fannie Mae housing insurance minimum?
100% of the replacement cost of loan balance
A loan calls for payments if 2000 a month for the first 60 months and then go up to 2300 a month for the remainder of the 30 year term. What kind of loan is this?
5 year fixed ARM
What is the purpose of the Market Conditions Addendum?
provide the lender with a clear understanding of the market trends and conditions in the subject neighborhood
At closing a borrower may deposit funds to establish reserves for what?
taxes and insurance
When the actual charges at the settlement exceed the estimates on the GFE by more than 10% tolerances, the loan originator must what?
has 30 days from the settlement to refund the excess to the borrower
What prevents the title from being transferred?
encumbance/ lien
The cost of an appraisal, paid outside of closing can be found on teh HUD-1 Settlement as?
When a telemarketer calls someone on the do not call list they ar4e subject to how much in fines?
A loan applicant's employment is verified by?
completion of a VOE by the employer
Borrowers buying a 100K house, sellers agree to credit up to 3% of the closing costs. The closing costs are $3500, how much can be credited?
The risk that an agent may not have his client's best interest at heart is called?
principal agent risk
How do you get your LTV ratio?
total of all loans/ property value
What is the IO fully indexed accrural rate?
the sum of the index + the margin
What is a 2/1 buydown?
reduces the interest rate by 2% the first year and 1% the second year
Service release premium represents?
the profit a bank makes when selling the servicing rights of a loan.
Which law prevents a lender from making any oral or written statement, in advertising or otherwise, to applicants or prospective applicants that may discourage a reasonable person from making or pursuing an app?
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