Final Quiz



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1. In what stage of the loan cycle does the attorney disperse the funds?

a. title search
b. contract
c. closing
d. underwriting

2. The document that spells out that the borrower must repay the loan is called:

a. mortgage
b. binder
c. promissory note
d. contract

3. A contract by which real property is pledged and allows for its transfer in the event of default is a:

a. mortgage
b. binder
c. note
d. contract

4. The stage of the loan cycle where you verify the borrower's income:

a. pre-approval
b. underwriting
c. conditioning
d. processing

5. An independent specialist who uses competing lender's funds to originate loans is called a:

a. mortgage banker
b. wholesaler
c. mortgage broker
d. loan originator

6. The residential mortgage where the whole loan is guaranteed by the federal government is a:

a. VA loan
b. FHA loan
c. community housing loan
d. affordable housing loan

7. A home's title can be held by a married couple as:

a. individual
b. tenancy by entirety
c. married
d. joint survivor

8. The loan officer requests the borrower’s social security number in order to:

a. order the credit report
b. verify pay stubs
c. verify tax returns
d. all of the above

9. Total assets minus total liabilities yields the:

a. look see ratios
b. gross profit
c. liquid assets
d. net worth

10. If a co-borrower is obligated to pay child support it must be listed on the application as a:

a. credit
b. court ordered asset
c. liability
d. judgment

11. If the borrower is legally separated, the loan officer should check the box marked:

a. unmarried
b. divorced
c. married
d. separated

12. In the primary lending market, the loan is:

a. serviced
b. originated
c. packaged
d. secured

13. Fannie Mae and Freddie Mac are:

a. owned and operated by the federal government
b. major secondary market investors
c. government sponsored enterprises
d. all of the above

14. Mortgage brokers need to acquire expertise in:

a. loan origination
b. loan processing
c. fair and ethical practices
d. all of the above

15. The purpose of the 1003 is to:

a. gather necessary information to qualify the borrower
b. determine debt to income ratios
c. help develop the best suited loan strategy
d. all of the above

16. The cycle of the loan where approval takes place is:

a. funding
b. origination
c. processing
d. underwriting

17. The loan officer need not be concerned with:

a. movement of the bond market
b. the local real estate market
c. Secretary of States Regulation B
d. interest rates

18. When disclosing the Good Faith Estimate the loan officer is:

a. satisfying a RESPA requirement
b. disclosing what you want from the borrower
c. duplicating the pre-approval disclosure
d. mandating the borrower's commitment

19. Ultimately, the appraisal is paid for by:

a. the lender
b. the wholesaler
c. Fannie Mae and Freddie Mac
d. the borrower

20. The agreement signed by the buyer and seller that spells out the conditions of sale is commonly referred to as the:

a. contract
b. offer to purchase
c. purchase agreement
d. all of the above

21. An item never found on a credit report is:

a. date of birth
b. race
c. social security number
d. home address

22. MI companies provide:

a. mortgage institution's insurance
b. primary mortgage insurance
c. private mortgage insurance
d. mortgage backed securities

23. Fees paid to attorneys, appraisers, pest inspectors, etc. are disclosed at closing on the:

a. note
b. truth in lending statement
c. the funding fees disclosure
d. HUD settlement statement

24. An example of a credit reporting agency is:

a. Transunion
b. Equifax
c. Experian
d. all of the above

25. The Uniform Residential Loan Application is commonly referred to as the:

a. 1003
b. contract
c. pre-qual sheet
d. balance sheet

26. The Truth in Lending Act is interpreted by:

a. the department of HUD in 26968
b. Congress to further the goal of home ownership
c. the Federal Reserve and called Reg Z
d. Consumer Coalition for the Truth in Lending

27. The Truth in Lending Act was designed to disclose the:

a. total cost of fees and points
b. cost of credit
c. lending patterns of banks
d. brokers’ yield spread premium

28. RESPA limits the:

a. amount you can charge on a 3rd party fee
b. number of times you can re-disclose your rate
c. amount a lender can hold in escrow
d. number of days you have to decline a loan

29. The responsibility of the underwriter is to assess the:

a. risk and the property
b. loan parameters and the risk cost
c. losses and the guidelines
d. LTV and debt ratios

30. A loan officer can work for more than one broker when:

a. their primary broker doesn't have the right loan
b. doing a 1st mortgage and a 2nd mortgage
c. leaving one broker and going to another
d. never

31. If a borrower is paid $1,659.25 biweekly their monthly gross income is:

a. $3,318.50
b. $3,381.50
c. $3,559.04
d. $3,595.04

32. The P&I payment on a $279,000.00 20 year loan at 7.25% is:

a. $2,205.15
b. $2,250.51
c. $1,903.27
d. $3,381.50

33. When selling a home, the law that prohibits discrimination in whom the house is sold to is:

a. RESPA
b. FHA
c. FCRA
d. TILA

34. APR stands for:

a. Appraisal Percentage Remainder
b. Actual Percentage Rate
c. Appreciation Persistence Rate
d. Annual Percentage Rate

35. Another name for the Reg. Z is:

a. Truth in Lending
b. RESPA
c. Predatory Lending Act
d. ECOA

36. RESPA stands for:

a. Residual Equity Shared Prosperity Act
b. Real Estate Sales Procedures Act
c. Renters Equal Security Promise Act
d. Real Estate Settlement Procedures Act

37. The instrument that gives “teeth” to the Note is the:

a. 37003
b. Deed of Trust
c. Fiduciary Hold Harmless
d. Mortgage

38. Another term used to describe predatory practices is:

a. usury
b. fraud
c. exploitation
d. greed

39. Mortgagor is another word for:

a. lender
b. co-borrower
c. mortgage banker
d. borrower

40. Mortgagee is another word for:

a. trustee
b. borrower
c. lender
d. none of the above

41. The legal document that officially states payment, rate and terms of repayment is the:

a. mortgage
b. deed of trust
c. debt ratio disclosure
d. promissory note

42. The information on the 1003 relating to HMDA is:

a. race and sex
b. religion and political affiliation
c. country of origin
d. credit history

43. The number of loans a private seller and note holder can make without being licensed is:

a. five
b. fifteen
c. three
d. seven

44. The law that prohibits a loan officer from discouraging anyone from applying for a loan is:

a. FCRA
b. MLA
c. RESPA
d. ECOA

45. The law that requires a credit denial or adverse action letter is:

a. MLA
b. ECOA
c. FCRA
d. PLA

46. The acronym VOD stands for:

a. Value on Discovery
b. Verification of Deposit
c. Verification of Debt
d. Value of Depreciation

47. The acronym VOE stands for:

a. Value of Equity
b. Verification of Equity
c. Verification of Employment
d. None of the Above

48. The acronym VOR stands for:

a. Verification of Residence
b. Verification of Rent
c. Verification of Reconciliation
d. None of the above

49. The acronym VOM stands for:

a. Verification of Mortgage
b. Value of Mortgage
c. Verification of Monies
d. None of the above

50. Lenders making high loan-to-value transactions (above 80%) are protected by:

a. reinsurance
b. PMI
c. right of rescission
d. MLA

51. Taxes and insurance funds are held in:

a. a trust account
b. an escrow account
c. a Lender's funds account
d. a the savings account of the borrower

52. The index plus the margin is:

a. the note rate
b. 2% of loan amount + closing costs
c. equal to Yield Spread Premium
d. points and fees

53. The maximum cushion a loan servicer is allowed to hold in the escrow account is:

a. 1/6 of the annual disbursements
b. 1/12 of the annual disbursements
c. 1/16 of the annual disbursements
d. none of the above

54. Regulation “B” refers to:

a. federal bankruptcy laws
b. a bi-lingual application
c. Equal Credit Opportunity Act (ECOA)
d. Fair Housing Act (FHA)

55. ECOA requires creditors to notify applicants of action taken on their application within ____ days of receipt of the application.

a. 60
b. 30
c. 15
d. 90

56. What Act requires that you provide the applicant with a copy of the appraisal?

a. FCRA
b. FHA
c. FACTA
d. ECOA

57. Which law forbids the imposition of different standards for approval that could have a disparate effect on different groups of borrowers?

a. FHA
b. HMDA
c. FCRA
d. ECOA

58. The illegal practice of denying loans for housing in certain neighborhoods is called:

a. flipping
b. blocking
c. skip tracing
d. redlining

59. The law that was part of the 1968 Civil Rights Act is:

a. HOEPA
b. PATRIOT Act
c. FHA
d. ECOA

60. The Graham-Leach-Bliley Act covers:

a. terrorism detection
b. the do-not-call list
c. the privacy and safeguards rule
d. bankruptcy protection

61. In the Financial Modernization Act of 1999, NPI stands for:

a. Now Protected Information
b. Nonpublic Personal Information
c. Negative Personal Information
d. Not Public Information

62. The GLBA is enforced by:

a. FDIC
b. FCC
c. HUD
d. FTC

63. The Safeguards Rule requires financial institutions to ensure the security of:

a. personal information collected
b. proper disposal of information
c. physical locks, doors, windows, internet connections
d. all of the above

64. You disclose to the applicant their credit score, reason codes and, in the case of manual underwriting, their credit file because of FACTA, which is an amendment to:

a. FRCA
b. FCRA
c. CRFA
d. none of the above

65. The USA PATRIOT Act of USAPA was introduced less than a week after what event?

a. bombing of Pearl Harbor
b. bombing of the USS Cole
c. the 9/11 attacks
d. none of the above

66. What law introduced sweeping changes to the regulation of wire taps, money laundering, immigration and electronic communications?

a. Freedom of Information Act
b. USA PATRIOT Act
c. Anti-Terrorism Act
d. none of the above

67. What act requires a borrower to properly identify themselves?

a. USAPA
b. Anti-Terrorism Act
c. Civil Rights Act
d. US Identification Act

68. The 1998 regulation “C” refers to:

a. HMDA
b. HOEPA
c. FHA
d. ECOA

69. What act helps determine if lenders are serving the housing needs of communities and assists public officials with identifying discrimination patterns?

a. HOEPA
b. FHA
c. ECOA
d. HMDA

70. The Do-Not-Call registry is part of the:

a. TSR
b. GLBA
c. FACTA
d. FCRA

71. How many months after a business relationship has been established are you allowed to call your customer?

a. 3 months
b. 18 months
c. 24 months
d. 36 months

72. What act requires you to provide your customer with your company’s privacy policy?

a. GLBA
b. TSR
c. USAPA
d. none of the above

73. What fair lending law was intended to encourage depository institutions to help meet the credit needs of communities including low to moderate income neighborhoods?

a. HMDA
b. HOEPA
c. CRA
d. FHA

74. Loan servicing can be performed by the lending institution or released to companies that:

a. collect payments from borrowers
b. manage escrow accounts to handle taxes and insurance
c. assist in the administration of a foreclosure
d. all of the above

75. Home Equity Lines of Credit (HELOC) are:

a. loans used to leverage the home’s equity in order to increase appreciation
b. open-ended lines of credit that are secured by a mortgage lien on a borrower’s property
c. variable rate loans, often having no set adjustment period and will move freely up and down with the index
d. both b & c

76. The three-party legal theory whereby the mortgagor conveys legal title until the debt is paid:

a. title theory
b. trustee state
c. lien theory
d. trust-in-lieu of deed

77. Bill is selling his $150,000 home to Carl. Bill has an assumable loan with “novation,” that has a balance of $140,000 on it. What will Carl do in order to buy the property and what does this mean to Bill?

a. Carl pays Bill $10,000 at closing, assumes Bill’s loan and takes ownership and assumes the liability of the remaining debt, however the lender does not release Bill from his liability on the loan if Carl defaults.
b. Carl pays Bill $10,000 at closing, assumes Bill’s loan and takes ownership and assumes the liability of the remaining debt, because of the loan’s novation clause, the lender releases Bill from any future liability on the loan if Carl defaults.
c. both a & b
d. none of the above

78. Tenancy by the Entirety is a form of ownership limited exclusively to a lawfully married “husband and wife”. In this case, each spouse owns all the property and there is an automatic “right of survivorship” to the remaining spouse, which means:

a. if it is a second marriage for both the property descends immediately to the surviving children
b. half the property would remain the surviving spouse’s and the other half would descend to the deceased spouses’ children
c. a spouse cannot will their share of the estate to a third party, the surviving spouse becomes the sole owner of the property
d. none of the above

79. The superior position of the first lien holder is based upon the doctrine of:

a. “first in time, first in line”
b. “first in line is first in time”
c. “first in time, first in right”
d. both a & b

80. If you are paid $1,112 monthly from your work and receive a child support payment of $620 per month, what is the maximum total income you can use when figuring your maximum payment?

a. $1747.50
b. $1,732.00
c. $2,165.00
d. $1,887.00

81. One of the great benefits of FHA loans:

a. are the more liberal underwriting guidelines
b. the loans are assumable
c. the total borrower investment can be as little as 3.5%
d. all of the above

82. How are FHA maximum loan limits established?

a. there are no loan limits only income limits
b. loan limits are based on income and credit score
c. the lesser of the county loan limit or the applicable LTV limit
d. loan limits are established by HUD based upon state housing averages

83. The disadvantages to FHA loans are:

a. the relatively low loan limits in certain areas
b. the cost of the upfront MIP (UFMIP)
c. investment property loans are not available through FHA
d. all of the above

84. What is the upfront VA guarantee fee called and how much does it cost?

a. VA guarantee fee and it costs 3%
b. VA funding fee and it cost 5%
c. VA funding fee and 2.15% for 0 to 4.99% down payments
d. There are no upfront fees, the VA funding fee is paid monthly

85. Can the VA Funding Fee ever be waived?

a. yes, for disabled veterans or for spouses of veteran who died in service
b. yes, for veterans over the age of 65
c. yes, but only for veterans with an establish loan track record
d. no, the VA funding can never been waived however it can be paid by the seller or financed

into the loan

86. What are the allowable debt ratios on a USDA-RD purchase money loan?

a. 43% total debt ratio
b. 28% over 36%
c. 29% over 41%
d. 31% over 45%

87. Are there minimum or maximum loan amounts on USDA-RD loans?

a. no minimums with $417,000 maximum loan limit
b. 100 k minimum with $417,000 maximum loan limits
c. no minimum, maximum based on country median price
d. no minimum and no maximum loan limits

88. Government sponsored loans are:

a. loans not directly lent by, or through a government agency
b. loans underwritten and serviced by a government agency
c. underwritten, lent and serviced by a government agency
d. all of the above

89. On VA guaranteed loans, the veteran can receive gift fund for cash requirements and:

a. the seller can contribute 4% of the sales price
b. the seller can contribute 6% of the sales price
c. the seller can take back a second to 110% CLTV
d. none of the above

90. Bill and Karen have agreed to buy a home for $95,000. They have little cash for closing costs and have applied for a USDA RD loan where the closing costs are $5,000 and the guarantee fee is 2%. The home has appraised for $100,000. How much cash will Bill and Karen have to bring to closing?

a. $5,000; the guarantee fee will be financed
b. $7,000; in USDA RD loans costs and fees can’t be financed
c. $0; all closing costs and fees will be financed into this loan
d. $2,000; costs and fees can be financed up to the appraisal value

91. Reggie and Marissa are buying a home through the FHA – 203 (b) program. The purchase price is $145,000. They paid outside of closing (POC), $950 upfront in pre-paid closing costs and fees to the lender. How much will Reggie and Marissa have to bring to closing in order to satisfy their minimum investment requirements?

a. $4,125
b. $3,400
c. $6,300
d. $5,075

92. Joanne is a divorced mother of three and wants to help her son Matt buy his first home by co-signing on his FHA loan. Joanne will not occupy the home or be on the deed to the property. She just wants to help Matt meet the debt to income ratios for loan approval. What document(s) will Joanne be required to sign at closing?

a. the note, not the deed or deed of trust
b. the note, the deed and the deed of trust
c. the note, the deed of trust and not the deed
d. a quitclaim release and the note

93. The CSBS is one of the regulatory bodies that maintain the NMLS. What is the full name of this authority?

a. Committee of State Bank Supervisors
b. Community of State Bank Superintendents
c. Conference of State Bank Supervisors
d. Committee of Supervising Bank Superintendents

94. An MLO is an individual who “assists a consumer in obtaining or applying to obtain a residential mortgage loan” by, among other things:

a. distributing information common for processing and underwriting
b. advising on loan terms including rates, fees and other costs
c. any activity that involves offering real estate brokerage activity
d. all of the above

95. HUD promulgated rules to implement RESPA known as Regulation X in 1974 to fulfill the intent of Congress that the purpose of RESPA was to:

a. create advanced disclosures to help consumers become better shoppers
b. eliminate kickbacks and referral fees that unnecessarily increased closing costs
c. Reduce the amount homebuyers are required to place in escrow accounts
d. all of the above

96. HUD’s stated purpose of the latest RESPA rule changes that expanded the GFE to three pages, which are effective January 1, 2010, were to:

a. simplify the GFE and put brokers at a disadvantage
b. to disclose the true cost of credit and ensure fairness for the emerging markets
c. help borrowers better understand their loan offer and re-characterize YSP
d. appease the banks by giving them an unfair market advantage

97. Unless the originator provides a revised GFE for cause, the originating party is bound within certain tolerances, to the terms listed on the GFE provided to the borrower. All the following charges have a zero tolerance and cannot exceed amounts stated on the GFE except:

a. per diem interest
b. the origination charge
c. the interest rate chosen, if locked in
d. the adjusted origination charges, while rate is locked

98. How many years must documentation of any reasons for providing a new or revised GFE be retained after settlement?

a. one
b. three
c. five
d. None of the above

99. If the originator discovers charges at settlement that exceed the charges on the GFE by more than the permitted tolerances, the originator must cure this violation within ____ calendar days after settlement.

a. three
b. seven
c. ten
d. thirty

100. There are three distinct pages to the new GFE. The first page is referred to as the “Summary” page. The second is the “Adjusted Origination Charges” page and page three is the:

a. “Tolerance” page
b. “Shopping Comparison” page
c. “Instructions” page
d. “Trade-Off Table” page