MLO questions for federal exam
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| Mortgage Backed Securities | show 🗑
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| show | written promise to repay a debt. One person/entity loans another money, and the other signs a promissory note, promising to repay the loan (plus interest).
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| show | Contract that makes the real property collateral for the loan. creates a lien on the property.
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| Conventional Loan | show 🗑
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| show | mortgage loan that meets all requirements to be eligible for purchase by federal agencies (Fannie/Freddie).
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| Conventional Nontraditional Loan | show 🗑
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| show | Mortgage loan made to individuals who don't qualify for loans that may be sale-able to Fannie or Freddie.
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| show | Mortgage on which the interest rate and monthly payments may be adjusted periodically to correspond with changes in the index to which the ARM loan was originated.
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| In a ARM what is the interest rate indicator used to determine changes in the mortgage interest rate? | show 🗑
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| What is the amount/percentage added to the index at each adjustment interval to determine the new interest rate to be paid by the borrower? | show 🗑
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| what is a adjustment interval? | show 🗑
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| show | when loan payment is less than interest alone. even though payments are made on time, amount owing increases.
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| show | 15 or 30 year loan. FHA's single (1-4) family housing used to finance the purchase of new or existing home. low down payment, flexible qualifying guidelines, limited fees, and limit on max loan amount ($417,000).
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| show | FHA mortgage insurance program that enables home-buyers to finance both purchase of a house and the cost of its rehabilitation through a single mortgage loan.
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| Adjustable Rate Mortgage (FHA 251) | show 🗑
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| show | DTI mortgage payment only: 31% of gross income
DTI mortgage payment plus long-term debt: 43% of gross income
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| Housing Expense Ratio | show 🗑
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| Total expense Ratio | show 🗑
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| what are Upfront Mortgage Insurance Premiums (UFMIP) | show 🗑
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| show | All properties must be owner-occupied, single family to four family homes are eligible, max amount to borrower $417,000, and loans assumable at lender's discretion.
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| show | low down payment (3.5% LTV), liberal qualifying ratios, liberal credit considerations, previous bankruptcy acceptable w/time limitations.
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| show | LTV ratio expressed the amount of a 1st mortgage lien as a percentage of the total appraised value of real property or sales price which ever is less)
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| show | The proportion of loans (secured by a property) in relation to its value. All loans added together divided by value of property.
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| what is PITI | show 🗑
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| show | insured conventional loans (exceeding LTV of 80%), all FHA/VA loans require borrower to escrow for property taxes and homeowners' insurance.
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| show | 1/12 (one-twelth) of annual property tax and 1/12 (one-twelth) of annual hazard insurance premium each month.
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| how is homeowners insurance paid? | show 🗑
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| show | w/ conventional loans more than 80%LTV lenders require borrower to pay for PMI/MIP. mortgage insurance company charges annual premium that is collected monthly.
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| show | money, cash flow, potential of new higher paying job, and damages to credit
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| what is a Uniform Residential Loan Application (Form 1003)? | show 🗑
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| show | Acknowledgement and Agreement section that borrower signs and agrees that all information provided is correct and truthful.
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| Section X (10) of the 1003 is what? | show 🗑
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| show | estimate of all closing fees, including prepaid and escrow items, as well as lender charges. helps customers shop for loans.
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| show | an entity in the business of selling policies of title insurance guaranteeing the ownership and quality of title to land, as well as providing closing services on behalf of borrower,lender, and seller
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| what is the HUD-1 Settlement Statement? | show 🗑
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| show | to promote the informed use of consumer credit by requiring disclosures about its terms and costs.
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| show | Residential Mortgage transaction (pg. 95), reverse mortgage, and open-end credit plan (traditional home equity line of credit).
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| show | within 3 business days after receiving a consumer's app. for a mortgage loan and before any fees are collected from borrower (except reasonable credit report charges)
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| how long until the creditor(s) can close the loan after borrower has received initial (TIL) disclosures? | show 🗑
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| show | If APR changes by more than 1/8 percentage point above or below initial APR.
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| show | in writing if consumer determines there is a bona fide personal financial emergency. waiver must describe emergency, specifically waive waiting period, and be signed by all applicable consumers.
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| show | 2 copies to each borrower (only 1 if delivered electronically in accordance w/consumer consent and other applicable provisions of E-Sign Act
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| what is a principle dwelling/Primary Residence? | show 🗑
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| what is a dwelling? | show 🗑
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| show | a right to keep property belonging to another person until a debt is paid fully.
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| what is a closed-end mortgage? | show 🗑
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| what is Bait and Switch advertising? | show 🗑
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| The ECOA (REG.B) prohibits discrimination against whom when applying for credit and/or extensions of credit | show 🗑
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| show | a state where all property (including income) acquired during marriage is presumed to belong equally to both parties (husband and wife)
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| how long must a creditor keep records of applicants according to the ECOA (REG.B)? | show 🗑
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| once creditor has all information needed to file and has been submitted to underwriting, how long does the lender have to render a decision? | show 🗑
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| according to REG.B how many copies of the adverse action must be given to each borrower? | show 🗑
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| show | $10,000 individual action, and $500,000 or 1% of creditor's net worth in class action
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| show | Requires creditors to make certain disclosures regarding a borrower's credit history.
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| what is included in a Credit Disclosure Notice? | show 🗑
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| according to the FACT Act you can obtain how many free credit reports every? | show 🗑
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| REG. Z/HOEPA (Home ownership and Equity Protection Act) does NOT cover what? | show 🗑
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| what is a purchase loan? | show 🗑
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| what is a due on demand clause? | show 🗑
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| show | if property is sold the loan balance must be repaid. mortgage containing this clause is not an assumable mortgage.
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| what is the purpose of the Gramm-Leach-Bliley Act (GLBA)? | show 🗑
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| what are safeguard rules? | show 🗑
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| what are per-texting provisions? | show 🗑
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| According to Section 9 of RESPA who is cannot require the buyer to use a particular title company? | show 🗑
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| what is a portfolio lender? | show 🗑
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| show | Licensing/per-licensing, education, and requirements w/NMLS&R
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| what does the Fair Credit Reporting Act (FCRA) do? | show 🗑
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| what disclosures impact the FCRA compliance? | show 🗑
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| what is the purpose of Home Mortgage Disclosure Act (HMDA) REG.C? | show 🗑
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| show | refusal by a lender to make loans secured by property in a certain neighborhood b/c of the racial/ethnic composition of the neighborhood
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| what 2 agencies contributed to the development of the SAFE Act? | show 🗑
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| show | describes unfair,deceptive,or fraudulent practices of some lenders during the loan origination process.
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| What is Mortgage Fraud? | show 🗑
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| show | perpetrated by borrowers, when they misrepresent info. on loan app., including income, employment, assets, and/or occupancy to purchase homes for homes they dont qualify for.
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| show | consists of systematic transactions by individuals who steal significant amounts of funds associated w/ mortgage lending
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| show | after identifying property to purchase, borrowers customize their income to meet loan criteria
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| show | nonexistent property loans where there is usually no collateral.
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| show | buyer of property borrows down payment from seller through the issuance of a non disclosed 2nd mortgage.
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| What is a Nominee Loan? | show 🗑
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| show | property is purchased, falsely appraised at higher value, and then quickly sold.
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| show | Subjects mislead homeowners who are in foreclosure or heading that way into believing that hey can save their homes in exchange for transfer of the dded and upfront fees.
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| show | The association develops ALTA title insurance forms used voluntarily by title insurers and works to develop a better understanding of its industry among those who use land title services
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| show | licensed individual/firm that charges a fee to serve as the mediator between buyer & seller. in business of arranging funding or negotiating contracts for a client but don't lend money.
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| What is DTI (Debt To Income)? | show 🗑
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| define desktop underwriter (DU) | show 🗑
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| define Fair Issac Corporation (FICO) | show 🗑
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| define Housing Expense Ratio (HER)/Front End Ratio | show 🗑
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| what is High Loan To Value (HLTV) | show 🗑
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| show | Freddie Mac's mortgage software program that gives its lenders an idea if a potential borrower is a good risk for the extension of credit
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| show | items on a good-faith estimate or HUD-1 that means a fee/charge was paid prior to closing. EX: appraisal and hazard insurance upfront fees
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| show | interest rate used as the reference point that a mortgage lender will neither be paid a rebate nor require discount points from a borrower for a mortgage
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| define Service Release Premium (SRP) | show 🗑
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| show | made up of mortgage payment plus any minimum monthly payment of long-term debt for a potential borrower
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| show | legal document issued by the bank. it validates the balance of borrower's checking and savings accounts
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| define Yield Spread Premium (YSP) | show 🗑
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| What is Total Loan to Value (TLTV) | show 🗑
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| show | point is a shortened form of percentage point. A point is 1 % point or 1 % of loan amount. charged by lenders to increase their yield/return on loan
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| show | difference between value of a piece of property and the charges against it. Market Value minus Total Debt equals Equity
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| what is Table Funding? | show 🗑
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| show | Capacity (income), Character (credit history), Capital (cash savings), and Collateral (property value).
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| show | allows the lender to call the entire loan balance due immediately if the borrowers is in default. same as due-on-demand clause.
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| define Prepayment Clause | show 🗑
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| define Prepayment Penalty | show 🗑
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| define Subordination | show 🗑
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| show | based on an appraiser's estimate of the value of the property to be purchased
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| show | mortgage loan usually in 2nd mortgage lien position, allowing borrower to obtain cash against the equity of a home, up to predetermined amount
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| what is Mortgage Insurance Premium (MIP) | show 🗑
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| show | index comprised of the 12-month average of the monthly yields of U.S Treasuries.
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| show | "pick a payment" or "pay option" ARMs. Types: Interest Only Payments, Specified Minimum Payment, 15 year Fully Amortizing Payment, or 30 year Fully Amortizing Payment
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| What are Graduated Payment Mortgages? | show 🗑
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| show | feature fixed rate for an initial period of time then a floating adjustable rate.
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| show | each payment include P&I ;lus 1/12 of annual taxes (T) and Insurance (I) =PITI. Lender places T&I money in escrow account
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| Define Reverse Mortgage | show 🗑
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| define Insured Conventional Mortgages | show 🗑
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