Taking advantage of ill-informed consumers through excessively high fees, misrepresented loan terms, frequent refinancing that does not benefit the borrower and other prohibited acts is called __________________________.
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Taking advantage of ill-informed consumers through excessively high fees, misrepresented loan terms, frequent refinancing that does not benefit the borrower and other prohibited acts is called __________________________. - ANSWER Predatory Lending.
RESPA-Real Estate Settlement Procedures Act - ANSWER The Federal Statute that deals with the settlement of residential mortgage loans.
RESPA's section 9 Prohibits - ANSWER Home sellers from requiring home buyers to purchase title insurance from a particular company providing title services.
The Dodd-Frank Act modifies ECOA to require a creditor to furnish a copy of an appraisal developed in connection with a first mortgage_____________________ and absolutely not later than ________ business days prior to closing. - ANSWER upon completion and 3 business days
TIL (Truth In Lending Disclosure) & GFE (Good Faith Estimate) - ANSWER Per the Dodd Frank Act, a single disclosure form combines these 2 statements.
Per the Dodd-Frank Acvt, to be a "qualified mortgage" total points and fees may not exceed ________% of the total loan amount. - ANSWER 3% (three percent)
Per a provision of the Dodd-Frank Act mortgage lenders are to determine that a borrower has a reasonable ability to repay a loan. Does this provision apply to all loans or just owner occupied loans? - ANSWER All loans, whether owner occupied or not.
A loan subject to HOEPA allows prepayment penalties for the first ______ years of the loan. - ANSWER 2 (two) years
Per the Dodd-Frank Act an abusive act would include which of the following:
1. One that materially interferes with the consumers ability to understand the product or service.
2. One that take unreasonable advantage of a consumers' lack of understanding.
3. One that takes unreasonable advantage of the consumer's reasonable reliance on the MLO. - ANSWER All three would be considered abusive acts.
Per the Dodd-Frank Act if an MLO receives compensation directly from a consumer, up to how much additional compensation may be received from a lender in the same transaction? - ANSWER $0.00, dual compensation is not allowed. Compensation must be borrower paid or lender paid.
What kinds of reasons are necessary for a lender to take adverse action with regard to a borrower? - ANSWER Specific reasons.
Adverse action means ______________________. - ANSWER A denial or revocation of credit. Also, a change in the terms of an existing credit arrangement or a refusal to grant credit in substantially the amount or terms requested.
Per Regulation B, Lenders should retain certain records for _____________ months. - ANSWER 25 Months
Because of the impact of the Dodd-Frank Act on a second mortgage, an APR that exceeds the ________ by more than _____% is the trigger that defines a high cost loan. - ANSWER APOR ( Average Prime Offer Rate), 8.5%
Regulation C is known as ________________________. - ANSWER HMDA, The Home Mortgage Disclosure Act.
What is the purpose of HMDA? - ANSWER The HMDA determines whether financial institutions are serving the housing needs of their communities. It also identifies patterns of discriminatory lending.
Under what circumstances can a lender with an Affiliated Business Arrangement require a borrower to use a specific third party service provider? - ANSWER If there are no kickback or referral fees and the service provider is an attorney, credit reporting agency or appraiser the lender can require that the borrower uses the provider
If a transfer of servicing occurs, the _______________ must provide a servicing transfer statement not less than ________ days before the transfer occurs. - ANSWER Servicer, 15 (fifteen) days.
An individual who fails the MLO written exam 3 times must wait _________ months to retake the exam. - ANSWER 6 (Six) Months
Per RESPA, an annual escrow statement is required to ______________. - ANSWER determine shortages and surpluses in the escrow account.
When must the Servicing Disclosure Statement be provided to the borrower? - ANSWER Within 3 (three) Business Days of the Application.
Any party involved in a federally covered loan that submits fraudulent information is subject to a fine of up to $___________ and up to __________years in prison. - ANSWER $1,000,000 (one million dollars), 30 years in prison
Per RESPA, an escrow cushion is limited to a maximum of _________ of the annual payments and surpluses over $_____must be refunded within ________ days. - ANSWER 1/6th (2 months), $50 (fifty dollars), 30 (thirty) days.
A seller takes back a $100,000 PMM @ 5.5% interest. This straight note will balloon after 10 years of payments. How much is the balloon payment? - ANSWER $100,000 + interest for the last month. A straight note (term mortgage) is a non-amortizing interest only mortgage. The balloon would include the entire principal plus the last month's interest, as interest is paid in arrears.
FNMA conforming debt ratios equal ______/________. - ANSWER 28%, maximum housing expense/36% maximum total obligations
HOEPA stands for ___________________________. - ANSWER Home Ownership and Equity Protection Act.
RESPA applies to what type of properties? - ANSWER 1-4 Unit Residential Properties
On a conventional mortgage loan, who makes the final decision regarding approval, denial or counter offer? - ANSWER The Underwriter
The Civil Rights Act of 1866, prohibited public and private racial discrimination in any property transaction and was expanded in 1968 in which act? - ANSWER The Civil Rights Act of 1968, also known as Title VIII of the Civil Rights Act , Also known as Title VIII, Also Known as The Fair Housing Act
Of the following, which is not required to be disclosed on the TIL statement? The (1) APR, (2) Note Rate, (3) Finance Charge, (4) Amount Financed or (5) Total of Payments - ANSWER The note rate is NOT required.
Which act of 1968 provides guidelines and restrictions regarding the financing, selling and renting of real property? - ANSWER The Civil Rights Act of 1968. AKA, The Civil Rights Act, AKA Title VIII, AKA The Fair Housing Act
Which act prohibits asking questions regarding child bearing intentions or birth control practices? - ANSWER ECOA/Regulation B, the Equal Credit Opportunity Act
Based on objective criteria regarding the condition and value of the property or area, may a lender deny loans in neighborhoods where property values are declining? - ANSWER YES, loans can be denied in a geographic area, but not for discriminatory reasons relative to the population of the area.
A teaser rate occurs in an ARM when the starting rate is less than the _____________. - ANSWER Fully indexed rate.
Per ECOA, is it true that while a lender must consider reliable alimony, child support or separate maintenance payments as income, the applicant is not required to disclose such income? - ANSWER Yes, it is true. Only income intended to be used for qualifying has to be disclosed and verified.
Of the following, who make a flood zone determination?
1. The Lender
2. The Appraiser
3. The Surveyor
4. The Underwriter - ANSWER 2. The Appraiser makes the flood zone determination.
Force-placed insurance protects the _________________.
a. Lender
b. borrower
c. both - ANSWER a. lender
FHA requires mortgage insurance on all loans for a period of ______________ years. - ANSWER 5 (five) years.
A property sells for $300,000 and requires a 20% down payment. The origination fee will be two points. How much is the origination fee? - ANSWER $4,800, $300,000 X 20% = $60,000 down payment
$300,000 X 80% LTV = $240,000,
$240,000 X 2% = $4,800
HOEPA prohibits ____________________ amortization. - ANSWER Negative. Increasing the principal balance, usually because of not paying sufficient interest which then is added to the principal balance of the loa.
How often does the external Do Not Call list get updated? - ANSWER Every 3 months or 90 days.
What does VA stand for? - ANSWER The Department of Veteran's Affairs
The three functions of a direct endorser include ______________ , __________________ and ________________. - ANSWER Originate, underwrite and close loans.
What is the down payment requirement on a VA guaranteed loan? - ANSWER 0, Zero. There is no down payment required.
The APR is also know at the _____________ rate. - ANSWER Effective rate.
The term of a loan effects the APR. The longer the term the ______________ the APR. - ANSWER Lower.
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