Basics in Mortgage Lending Test for Loan Officers

Transcription

1 Basics in Mortgage Lending Test for Loan Officers Name: Date: Company Name: 1. The purpose of the Equal Credit Opportunity Act is: To discourage predatory lending To create new avenues and programs for loan refinancing To eliminate discriminatory treatment in lending To increase lending to low-income borrowers 2. Kyle receives an application from a potential borrower seeking a mortgage loan. Kyle finds that the borrower has a very low debt level, an outstanding credit score, and has been with the same employer for 25 years. However, Kyle also learns that the borrower is 67 years old. Knowing this, Kyle ultimately rejects the application. This is: Steering An ethical and sound business practice of protecting Kyle's business Discrimination based on age Redlining 3. The Home Affordable Refinance Program was designed to help: Homeowners with mortgages held by Fannie Mae or Freddie Mac with poor pay history and positive equity Homeowners with mortgages owned by Fannie Mae or Freddie Mac with good pay history and little or no equity Homeowners negotiating with Fannie Mae or Freddie Mac to sell their properties via a short sale Homeowners with mortgages held by Fannie Mae or Freddie Mac that are in foreclosure and have little or no equity 4. Under RESPA, at the time that a written application is submitted, or no later than three business days after submission, a loan originator is required to provide the borrower with a copy of which of the following? The loan originator's NMLS number and contact information Good Faith Estimate and Truth in Lending disclosures table showing the current interest rate The name and contact information of the mortgage banker funding the transaction. LSMG Basics in Mortgage Lending Test for LOs Page 1 of 5 Revised 3/19/2014

2 5. Which of the following does RESPA not prohibit? Premiums charged on fees for third-party services Referral fees Reasonable fees paid for services actually performed Kickbacks 6. All of the following types of income are allowed to be :grossed-up EXCEPT Public assistance Alimony Disability Social Security 7. Most lenders require mortgage insurance if the loan exceeds: 75% LTV 80% LTV 50% LTV 55% LTV 8. Enacted in 2008, the Secure and Fair Enforcement for Mortgage Licensing Act mandates which of the following? A nationwide program for reporting and preventing defaults caused by risky loan originations A state program for tracking loan origination compensation State and federal collection of loan originator s loans to be placed in a national registry A nationwide licensing and registration system for residential mortgage loan originators 9. A borrower had a 2-1 buy down loan with an interest rate of 6.5%. The rate in year one is 4.5%. The rate in year two is 5.5%. The note rate in the first year is which of the following? 4.5% 5.5% 6.5% 7.5% 10. Which of the following is true of the HUD-1A Settlement Statement? It is prepared by the closing agent and approved by the title company. It is prepared by the settlement agent and approved by the lender. It is prepared by the lender and approved by the title company. It is prepared by the mortgage broker and approved by the lender. LSMG Basics in Mortgage Lending Test for LOs Page 2 of 5 Revised 3/19/2014

3 11. Misrepresenting information or intentionally not disclosing material facts necessary for an originator to consider for loan approval is: Redlining Legal and unethical Negligence Mortgage fraud 12. A customer has very little down payment (less than 3.5 percent) but strong credit history income and employment. For what type of loan might the customer qualify? An 80% conventional fixed loan with a 20% second A USDA loan or VA Loan An FHA loan The appraisal came in 10% higher than the purchase price so the borrower only needs to borrow 90%. 13. To qualify for a USDA loan the customer must meet: Have sufficient funds for 3.5 % down payment At least a 720 Credit Score The property must be eligible for USDA financing and the borrower must be eligible within USDA Income limits per county. Must be a farmer. 14. A Male Military Veteran wishes to buy another property and has just sold him primary residence. Unfortunately he had very little equity on the home and has no down payment. He has a 640 credit score and has strong income and employment. Which statement is true? He may qualify for VA loan but if his primary residence was financed under a VA Loan he cannot use this entitlement again He may qualify for VA loan but if his primary residence was financed under a VA Loan he must reinstate his certificate of eligibility He cannot qualify with a credit score of 640.He cannot qualify because he has no down payment He cannot qualify because he has no down payment 15. VA loans require mortgage insurance True False LSMG Basics in Mortgage Lending Test for LOs Page 3 of 5 Revised 3/19/2014

4 16. A Customer has a 651 Credit Score, a back end DTI Ratio of 44%, she is just out of Nursing School and employed as a nurse. Additionally, she has gift funds from mom and dad for a down payment. The down payment is 4% of the purchase price of her first home in the City of Richmond. For what type of loan would she generally qualify? A conventional loan with a 16 percent second She cannot qualify because she does not have two years of employment A USDA loan A FHA loan 17. You are meeting with a borrower to take their application for the purchase of a new home, which of the following documents should the borrower be asked to submit with the application: Select one or more: 30 days paystubs 2 months bank statements Sales contract All of the above 18. Who must sign and date the application? Select one or more Loan Officer Underwriter Borrower Real Estate Agent 19. Which of the following is not allowed as a source for down payment funds? Borrower savings account funds Sale of personal assets Money borrowed from a credit card Equity in real estate owned 20. The benefit of a 30 year fixed rate product as compared to a 15 year fixed rate product include: 15 year mortgages balloon after 15 years 15 year mortgages are not saleable on the secondary market 15 year mortgages allow a higher debt to income ratio than 30 year 30 year mortgages allow a lower monthly payment than a 15 year LSMG Basics in Mortgage Lending Test for LOs Page 4 of 5 Revised 3/19/2014

5 21. The U.S. Government offers which programs for home ownership? USDA Federal Housing Administration (FHA) Veterans Administration (VA) All listed here. 22. Which selection best describes a key feature of the Right of Rescission - Notice of Right to Cancel? Applies to non-purchase money transactions on a primary or owner occupied home Allows the borrower 5 days to reconsider Applies to all settlement transactions Allows the borrower to cancel the appraisal 23. What is the purpose of an Interest Rate Reduction Refinance Loan (IRRRL)? To reduce the veteran s monthly mortgage payment only To reduce the veteran s loan term only To reduce the veteran s monthly mortgage payment and/or term of their existing VA loan None of the above 24. Which one of the following applicants would not be eligible for a VA Loan? Frank, who served four years in the Navy during peacetime Shelly, whose husband Mark has been MIA/POW for nearly two months Jim, who served three years in the U.S. Army and was discharged due to a service-connected disability All of these applicants are eligible None of the above applicants are eligible 25. Which of the following is NOT a RESPA violation? A mortgage lender gives an attorney a fee for introducing a customer. An employer pays its own employee for referrals. A mortgage broker pays a real estate broker for mortgage loan referrals. A mortgage broker pays for title services on behalf of a developer in return for which the developer agrees to refer buyers to the mortgage broker. LSMG Basics in Mortgage Lending Test for LOs Page 5 of 5 Revised 3/19/2014