Questions and Answers
A lender's insurance policy protects the ______ and is ________ when the property is assigned to a new owner.
lender; transferable
Which document provides public notice of an outstanding claim against real property?
security instrument
What is the maximum mortgage payment a borrower can afford if he earns $8,750 monthly and has debts of $1,137?
$2,013
How long will a bankruptcy remain in an individual's credit file according to the Fair Credit Reporting Act?
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What is the note rate if a 2/1 temporary buydown has a start rate of 2.5%?
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What funds are considered an asset on the Uniform Residential Loan Application that are paid to the selling agent?
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Under regulations Z, all are exempt from finance charges except?
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Calculate the monthly interest for a $225,000 loan amount with a 3.5% interest rate. What would this be?
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The enforcement agencies for the Do Not Call Improvement Act are shared with ____________ and the ____________?
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For a loan amount of $130,000 with a 4% APR, what is the maximum fee a creditor can charge to avoid exceeding the HOEPA threshold?
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The borrower can legally occupy two primary residences.
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It is permissible for an MLO to refer clients to a housing counselor who is related to them.
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What should Beth's MLO inform her about the implications of obtaining a cash-out refinance from her grandmother?
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Study Notes
Lender's Insurance Policy
- Protects the lender and is transferable when the property is assigned to a new owner.
Public Notice of Outstanding Claims
- A security instrument provides public notice of an outstanding claim against real property recorded at the county courthouse.
- A security instrument is synonymous with a lien, securing a loan against a borrower's home.
Borrower's Maximum Mortgage Payment
- A borrower with a monthly income of $8,750 and debts of $1,137 can afford a maximum mortgage payment of $2,013 using conventional debt-to-income ratios.
Fair Credit Reporting Act (FCRA)
- Bankruptcies remain on an individual's credit file for 10 years, while collections and paid tax liens remain for 7 years.
2/1 Temporary Buydown
- A 2/1 temporary buydown that starts at a rate of 2.5% will have a note rate of 4.5%, reflecting the two-point reduction and subsequent yearly increase.
Earnest Money
- Earnest money paid to the seller is credited towards closing costs and treated as an asset on the Uniform Residential Loan Application.
Regulation Z Exemptions
- All finance charges are subject to Regulation Z, except for interest, which is considered a cost of financing a loan.
Monthly Interest Calculation
- For a $225,000 loan at a 3.5% interest rate, the monthly interest amounts to $656.25.
Do Not Call Improvement Act Enforcement
- The Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) share enforcement responsibilities for the Do Not Call Improvement Act.
HOEPA Fees
- For a loan amount of $130,000 with a 4% APR, the maximum fees a creditor can charge to stay below the HOEPA threshold is $6,500 (5% of the loan amount).
Fraudulent Loan Applications
- A borrower who claims a new property will be a primary residence while retaining another primary residence commits fraud, as only one primary residence is permissible.
Referral Restrictions for MLOs
- Mortgage Loan Originators (MLOs) cannot have affiliations with housing counseling agencies when referring clients, to prevent conflicts of interest.
Fraudulent Nominee Loans
- If an MLO discovers that a borrower intends to have a relative obtain a cash-out refinance to provide funds illicitly, the MLO must inform the borrower of the legal implications as it constitutes a fraudulent nominee loan.
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Description
Test your knowledge with these flashcards covering key concepts in real estate lending and property transactions. Perfect for mortgage loan originators preparing for their final exams, these questions focus on essential definitions and procedures.
