Foreclosure Prevention Certification Exam Study Guide Sample Questions With Answers from Previous Exams

Transcription

1 Foreclosure Prevention Certification Exam Study Guide Sample Questions With Answers from Previous Exams Exam structure and tips: Structure: the exam is composed of questions divided into two parts o Shorter question format: short answer, multiple choice, matching, T/F o Word problem/hypothetical format: typically 2 questions with lengthy answers requiring multiple calculations o Duration: you have one hour to complete the exam Tips: o Exam is based on information on the Center s updated Resource Guide, Volume 1 (Updated October 2014 and in Network Partner Portal at cnycn.org) o Know your calculations and the various loss mitigation options o The MFY Waterfall Tool will be available at the exam for use o Sample questions were taken from a 2012 exam Answers are in the back section of this study guide. 1. Name 3 options for a curable FHA default. 2. A homeowner has social security income of $1,800 per month. What will the servicer consider the homeowner s gross income to be? a. $1,500 b. $1,800 c. $2,000 d. $2, How do you calculate the gross monthly income of an hourly wage earner. Please write out the equation. 4. The Attorneys General Mortgage Settlement covers each of the following servicers except: a. Chase b. HSBC c. GMAC/Ally d. Bank of America 5. Write out the formula for the back-end ratio 6. Name 3 differences between HAMP Tier 1 and HAMP Tier 2 7. Home Affordable Unemployment Program can be used to for loans on vacant or tenant occupied properties 1

2 8. FHA HAMP and MHA HAMP use the same Net Present Value Test 9. What does it mean to capitalize arrearages? 10. The HAMP UP program offers relief for up to the following number of months: a. 3 months b. 6 months c. 9 months d. 12 months 11. To qualify for an FHA Short Refinance, the existing loan must not be an FHA insured loan. 12. How long must overtime and bonuses occur to be considered stable and recurring by underwriting? a. 3 years b. 2 years c. 1 year d. 18 months 13. What is gross income? a. Income before taxes only. b. Income after taxes. c. Income before taxes and any other deductions. 14. FHA-HAMP combines a partial claim and a loan modification 15. What is the maximum amount of principal that can be deferred under FHA? a. 25% b. 30% c. 31% d. 38% 2

3 The past several years have been difficult for Thomas. He had a great job that provided him with more than enough money to pay his bills, including the mortgage on the home he purchased in But he was laid off in 2009 and eventually fell behind on his mortgage. After lots of paperwork and phone calls he was able to obtain a HAMP modification. Everything was fine for a while but they he once again lost his job. He had money saved up so he was able to weather his layoff for several months. Thomas started to run low on funds so he took the first job which he was offered. This job paid even less then the last job and he once again could not afford his mortgage. Thomas is one month behind on his mortgage when he comes to your office looking for assistance. You conduct an intake with him and are able to gather the following information. UPB (w/o arrears): $500,000 Value: $450,000 FHA: No 30 year 8% PI: $3,670 TIA: $450 Number of Months Behind: 1 Month Gross Monthly Income: $6,000 Net Monthly Income: $4,750 Total Non-Mortgage expenses: $1,100 Total Unsecured Debt: $12,000 Hardship: Reduction in income Explain what your proposal would be to the servicer. Please be sure to include how your proposal will cure the default and the terms of your proposed workout. Please explain in a clear manner how the proposal creates an affordable situation for the client. 3

4 1. Name 3 options for a curable FHA default. Partial claim FHA HAMP Modification Special Forbearance ANSWER KEY 2. A homeowner has social security income of $1,800 per month. What will the servicer consider the homeowner s gross income to be? e. $1,500 f. $1,800 g. $2,000 h. $2,250 d 3. How do you calculate the gross monthly income of an hourly wage earner. Please write out the equation. hourly rate x # hours worked per week x 52 weeks/12 months = monthly income 4. The Attorneys General Mortgage Settlement covers each of the following servicers except: e. Chase f. HSBC g. GMAC/Ally h. Bank of America b 5. Write out the formula for the back-end ratio Back-end ratio = Total monthly debt expenses (PITI + all other debt) Gross monthly income 6. Name 3 differences between HAMP Tier 1 and HAMP Tier 2 HAMP Tier 2 can be used for rental properties HAMP Tier 2 can be used for vacant properties that intend to be rented DTI can be less than 31% Borrowers who defaulted on Tier 1 are eligible for Tier 2 4

5 HAMP Tier 2 interest rate is not reduced to 2%; The interest rate will be adjusted to the current Tier 2 Rate. Different implementation dates For Tier 2, if the loan s pre-modification mark-to-market LTV ratio is greater than 115 percent, principal forbearance will be calculated at an amount equal to the lesser of (i) an amount that would create a post-modification mark-to-market LTV ratio of 115 percent using the interest bearing principal balance or (ii) an amount equal to 30 percent of the post-modified unpaid principal balance of the mortgage loan. There is no excessive forbearance limit in HAMP Tier Home Affordable Unemployment Program can be used to for loans on vacant or tenant occupied properties True 8. FHA HAMP and MHA HAMP use the same Net Present Value Test False 9. What does it mean to capitalize arrearages? Past due payments and fees are added to the unpaid principal balance. 10. The HAMP UP program offers relief for up to the following number of months: e. 3 months f. 6 months g. 9 months h. 12 months d 11. To qualify for an FHA Short Refinance, the existing loan must not be an FHA insured loan. True 5

6 12. How long must overtime and bonuses occur to be considered stable and recurring by underwriting? e. 3 years f. 2 years g. 1 year h. 18 months b 13. What is gross income? d. Income before taxes only. e. Income after taxes. f. Income before taxes and any other deductions. c 14. FHA-HAMP combines a partial claim and a loan modification True 15. What is the maximum amount of principal that can be deferred under FHA? a. 25% b. 30% c. 31% d. 38% b 6

7 The past several years have been difficult for Thomas. He had a great job that provided him with more than enough money to pay his bills, including the mortgage on the home he purchased in But he was laid off in 2009 and eventually fell behind on his mortgage. After lots of paperwork and phone calls he was able to obtain a HAMP modification. Everything was fine for a while but they he once again lost his job. He had money saved up so he was able to weather his layoff for several months. Thomas started to run low on funds so he took the first job which he was offered. This job paid even less then the last job and he once again could not afford his mortgage. Thomas is one month behind on his mortgage when he comes to your office looking for assistance. You conduct an intake with him and are able to gather the following information. UPB (w/o arrears): $500,000 Value: $450,000 FHA: No 30 year 8% PI: $3,670 TIA: $450 Number of Months Behind: 1 Month Gross Monthly Income: $6,000 Net Monthly Income: $4,750 Total Non-Mortgage expenses: $1,100 Total Unsecured Debt: $12,000 Hardship: Reduction in income Explain what your proposal would be to the servicer. Please be sure to include how your proposal will cure the default and the terms of your proposed workout. Please explain in a clear manner how the proposal creates an affordable situation for the client. Answer is HAMP Tier 2 Advocacy letter should request this and explain affordability referencing current income Must not reference every option in the loss mitigation universe Sample I am writing on behalf of Thomas who is having difficulty making his mortgage payments. Thomas has fallen behind on his mortgage payments as a result of a reduction in income due to job loss. Thomas received a HAMP modification in 2009 but he has since had a change in circumstances that require another modification. I propose that Thomas receive a HAMP Tier 2 modification. A Tier 2 modification would create an affordable payment for Thomas as well as allow for a budget surplus that would create a stable financial situation for Thomas and would allow him to become current and make his mortgage payments. Thomas interest rate should be reduced to 3.84% (3.34% is the Freddie Mac rate plus 0.5% is the added risk adjustment) and the term of the loan should be extended to 480 months. The new principal and interest payment would be $2, and the new principal, interest, taxes and insurance would come to $2, This results in a post modification debt to income ratio of 41.99% and a new principal and interest payment that is 43.62% less than the previous principal and interest payment. Both the post modification debt to income ratio and the new principal and interest payment fall within the guidelines of HAMP Tier 2. This solution would provide Thomas with an affordable mortgage going forward. 7