NMLS_Federal__Questions_and_Answers by fanzhongqing

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									The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 requires that each state
                                                                                          license or
                                                                                          register
                                                                                          residential
                                                                                          and
                                                                                          commercial
                                                                                          loan
                                                                                          originators.
                                                                                          deny a
                                                                                          license to
                                                                                          any person
                                                                                          who has a
                                                                                          felony
                                                                                          conviction.
                                                                                          establish
                                                                                          its own
                                                                                          loan
                                                                                          originator
                                                                                          registration
                                                                                          system.
                                                                                          impose a
                                                                                          standard of
                                                                                          at least 20
                                                                                          hours of
                                                                                          prelicense
                                                                                          education
                                                                                          plus
                                                                                          testing for
                                                                                          loan
                                                                                          originator
                                                                                          licensing.
The correct answer is D. The SAFE Act does require at least 20 hours of education as well as
testing for a loan originator license. It requires that the Conference of State Bank Supervisors
(CSBS) and the American Association of Residential Mortgage Regulators (AARMR) to establish and
maintain a Nationwide Mortgage Licensing System and Registry in which the states participate, so
they do not have to establish their own system. The Act requires the licensing or registration of
residential (not commercial) loan originators. It does not prevent everyone with a felony conviction
from becoming licensed.

                                      = Correct     = Incorrect

An elderly couple with high equity in their home wants a loan that will provide money for living
expenses. The most suitable loan for them is a
                                                                                         cash-out
                                                                                      refinanced
                                                                                      mortgage.
                                                                                      reverse
                                                                                      mortgage.
                                                                                      purchase
                                                                                      mortgage.
                                                                                      subordinate
                                                                                      mortgage.
The correct answer is B. The most suitable loan is a reverse mortgage which provides funds
without the obligation to make periodic payments. The couple need only repay when they sell the
home and cash out their equity.
A person wanting a loan to build a house would apply for what type of loan?
                                                                                    Take out

                                                                                    Reverse
                                                                                    mortgage
                                                                                    Construction

                                                                                    Adjustable

All of the following are true of the HECM EXCEPT
                                                                                   It is the Home
                                                                                   Equity
                                                                                   Conversion
                                                                                   Mortgage
                                                                                   It is a loan
                                                                                   insured by the
                                                                                   Federal
                                                                                   Housing
                                                                                   Administration.
                                                                                   It is only
                                                                                   available to
                                                                                   persons age 62
                                                                                   or older.
                                                                                   The borrower
                                                                                   must meet
                                                                                   certain income
                                                                                   and credit
                                                                                   requirements.
The correct answer is D. The FHA reverse mortgage program is the Home Equity Conversion
Mortgage (HECM). It is for seniors (age 62 or older) and does not require repayment until the
property is no longer the borrower's home. Since the loan does not require monthly payments, the
borrower is not required to satisfy any income or credit requirements.

The promise to repay a monetary obligation is contained in which of the following?
                                                                                   A note

                                                                                   A mortgage

                                                                                   A GFE

                                                                                   A loan
                                                                                   application
The correct answer is A. A note is a written document in which a borrower promises to repay a
debt, either on demand or at a certain time. A mortgage is given with a note to the lender to make
the borrower’s property security for the note.
Who is responsible for determining that states are complying with the SAFE Act?
                                                                                 Conference of
                                                                                 State Bank
                                                                                 Supervisors
                                                                                 (CSBS)
                                                                                 Consumer
                                                                                 Financial
                                                                                 Protection Bureau
                                                                                 (CFPB)
                                                                                 Federal Reserve
                                                                                 Board (FRB)
                                                                                 Federal Trade
                                                                                 Commission
                                                                                 (FTC)
The correct answer is B. While the states have a duty to enact licensing standards that meet
SAFE Act requirements, overall responsibility for interpretation, implementation, and compliance
with the SAFE Act was delegated to the U.S. Department of Housing and Urban Development (HUD).
However, the SAFE Act was amended by the Dodd-Frank Wall Street Reform and Consumer
Protection Act. Effective July 21, 2011, the authorities and duties delegated to HUD are now
delegated to the Consumer Financial Protection Bureau (CFPB).
Which of the following is true regarding assumability of Fannie Mae and Freddie Mac
conforming loans?
                                                                                These loans are
                                                                                always assumable
                                                                                Assumability is
                                                                                determined from
                                                                                the provisions of
                                                                                  the loan
                                                                                  documents and
                                                                                  particular
                                                                                  circumstances
                                                                                  These loans are
                                                                                  never assumable
                                                                                  These loans have
                                                                                  the same
                                                                                  provisions as FHA
                                                                                  and VA
The correct answer is B. Notes for Fannie Mae and Freddie Mac conforming loans have due-on-
sale clauses restricting, but not totally prohibiting, assumption of the loans. Fannie Mae and Freddie
Mac will accept certain assumptions without review others when the lender added provisions to the
transaction that stated the loan was assumable. FHA and VA are much more liberal in terms of
allowing assumptions
A defeasance clause in a note provides that
                                                                                 redemption of the
                                                                                 loan will defeat a
                                                                                 foreclosure.
                                                                                 upon sale of the
                                                                                 property the loan
                                                                                 must be repaid,
                                                                                 unless the lender
                                                                                 gives consent
                                                                                 otherwise.
                                                                                 upon repayment of
                                                                                 the debt in full the
                                                                                 note and mortgage
                                                                                 will be voided.
                                                                                 default of the loan
                                                                                 with trigger
                                                                                 foreclosure.
The correct answer is C. The defeasance clause in a note provides that the lien is defeated upon
repayment of the debt in full and the note and mortgage will be voided.

Which of the following is associated with a federal VA loan?
                                                                                Funding fee

                                                                                Risk-based pricing

                                                                                MIP
                                                                              PMI

The correct answer is A. For a VA loan, the applicant is charged an upfront funding fee, which
may be financed. This pays for a guarantee that ensures the lender against loss in the event the
borrower defaults. PMI (private mortgage insurance) serves the same purpose as the VA guarantee,
but is used in conventional financing. MIP (mortgage insurance premium) refers to the charge to a
borrower obtaining an FHA loan for the insurance to protect the lender against default. Risk-based
pricing is the concept of charging the borrower a higher interest rate that should cover a lender's
losses on high-risk loans, so as to avoid the need for mortgage insurance (i.e., self-insurance). It
was used for subprime loans.
Which of the following is true of the mortgage note?
                                                                             It contains the loan
                                                                             terms.
                                                                             It creates a lien on the
                                                                             property securing the
                                                                             debt.
                                                                             It is security for the
                                                                             mortgage loan.
                                                                             It is recorded.

The correct answer is A. With a real estate mortgage loan, a borrower gives a lender a promise to
repay the money borrowed with interest in the form of a promissory note. The note is both a
promise to pay and evidence of the debt. It contains all of the terms of the loan. The mortgage is
the document that is recorded, as it creates a lien on the property by making the property security
for the debt.
Which of the following is responsible for maintaining the NMLS?
                                                                           The Conference of State
                                                                           Bank Supervisors and
                                                                           the American
                                                                           Association of
                                                                           Residential Mortgage
                                                                           Regulators
                                                                           The state financial
                                                                           industry regulators
                                                                           The Federal Trade
                                                                           Commission
                                                                           The Federal Reserve
                                                                           Board
The correct answer is A. The SAFE Act requires the Conference of State Bank Supervisors (CSBS)
and the American Association of Residential Mortgage Regulators (AARMR) to establish and maintain
a Nationwide Mortgage Licensing System and Registry (NMLS or NMLSR) for the residential
mortgage industry.
A borrower who obtains a loan on the basis that he will be an owner-occupant, must
intend to
                                                                             move into the property
                                                                             within 60 days after
                                                                             closing.
                                                                             live in the property for at
                                                                             least five years.
                                                                             live in the property at
                                                                             least six months.
                                                                             move into the property
                                                                             within 30 days after
                                                                             closing.
The correct answer is A. For an FHA loan, VA loan or conforming loan, the owner-occupant
applicant must intend to move in within 60 days after closing and stay in the property for 12
months.
A mortgage note contains
                                                                            the interest rate.

                                                                            the APR.

                                                                            the effective date of the
                                                                            lien.
                                                                            all encumbrances on the
                                                                            title.
The correct answer is A. The note is the borrower's promise to pay. It does not create a lien. It
contains the terms of the loan, including the interest rate (but not the APR), the payment due dates,
late payment penalties, and any right to prepay, along with any penalty for prepayment.
Which of the following is true of the maximum FHA loan amount?
                                                                          It is based on the credit
                                                                          history of the borrower.
                                                                          It is the same as the Fannie
                                                                          Mae loan limit.
                                                                          It cannot exceed the limit
                                                                          set for the geographic area
                                                                          in which the property is
                                                                          located.
                                                                          There is none

The correct answer is C. The maximum insurable FHA mortgage is the lesser of a statutory loan
limit for the area, typically a county or metropolitan statistical area (MSA) or the applicable loan-to-
value (LTV) limit.
An FHA loan is a loan that is
                                                                       made by the Federal Housing
                                                                       Adminstration.
                                                                       insured by a federal agency.

                                                                       subsidized by a federal
                                                                       agency.
                                                                       restricted to first-time
                                                                       homebuyers.
The correct answer is B. FHA (The Federal Housing Administration) insures loans made by
approved lenders, to anyone who can satisfy the financial requirements. It is not restricted to low-
income or first-time buyers.

The transfer of title to real property from one party to another is called
                                                                      subrogation.

                                                                      an assignment.

                                                                      a conveyance.

                                                                      redemption.

The correct answer is C. When one transfers title to real property he is conveying title. The
transaction itself can be called a conveyance and the document transferring the title (e.g., a deed)
could be called a conveyance.
All of the following are true regarding FHA and VA loans EXCEPT
                                                                    FHA, but not VA, requires that
                                                                    the real estate contract allow the
                                                                    borrower to withdraw from the
                                                                    transaction without penalty if
                                                                    the property appraises for less
                                                                    than the offered price.
                                                                    FHA requires a downpayment,
                                                                    but the VA does not.
                                                                    FHA insures, while VA
                                                                    guarantees, lenders against
                                                                    certain losses.
                                                                    The FHA UFMIP and the VA
                                                                    funding fee are nonrefundable.
The correct answer is A. Both FHA and VA require escape clauses, allowing the borrower to get
his earnest money back if the property does not appraise for his offered price. The main benefit of
the FHA loan is a low down payment; the main benefit of the VA loan is the zero down payment.
FHA does insure the lender, and VA does guarantee the lender, against loss in the event of borrower
default. The upfront fees for the FHA insurance and VA guarantee are nonrefundable. (However, if
an FHA loan is refinanced by another FHA-insured loan within three years, a portion of the UFMIP on
the first loan can be applied to the new premium for the new loan).
NMLSR stands for
                                                                  National Mortgage Lending
                                                                  System and Registry
                                                                  National Mortgage Licensing
                                                                  System and Registry
                                                                  Nationwide Mortgage Licensing
                                                                  System and Registry
                                                                  National Mortgage Lending
                                                                  System and Registry
The correct answer is C. NMLSR (or NMLS) stands for Nationwide Mortgage Licensing System and
Registry.
When a veteran obtains a VA loan he
                                                                 cannot accept any seller
                                                                 concessions or closing cost
                                                                 assistance.
                                                                 the seller must repair all items in
                                                                 the property in need of repair so
                                                                 the borrower will have no repair
                                                                 expenses upon taking possession.
                                                                 he may use the property for
                                                                 investment purposes if he has
                                                                 purchased it with at least a 10%
                                                                 down payment.
                                                                 must occupy the property within 60
                                                                 days after closing
The correct answer is D. A VA borrower must use the property as his primary residence, and
must move in within a reasonable time after closing, which is interpreted as being not later than 60
days. The borrower can accept seller concessions totaling up to 4% of the purchase price and
closing cost assistance of an unlimited amount from the seller. The VA does not require a seller to
fix up the property, except for material defects, e.g., those affecting the safety of occupants.
Which type of loan would never have a mortgage insurance premium?
                                                                A jumbo loan with a 15% down
                                                                payment
                                                                An FHA loan with a 20% down
                                                             payment
                                                             A VA loan with nothing down

                                                             A conforming loan with a 10% down
                                                             payment
The correct answer is C. The VA loan is guaranteed, not insured, so it has no mortgage insurance
premium. For an FHA loan there is mortgage insurance, even with 20% down. There is an upfront
premium and for most FHA loans, an annual premium until the loan balance is below 78% of the
original purchase price or appraised value. Most conventional loans require mortgage insurance if
the downpayment is less than 20%.

Mortgage-backed securities are backed by the full faith and credit of the United States
when guaranteed by
                                                            MGIC.

                                                            FNMA.

                                                            FHLMC.

                                                            GNMA.

The correct answer is D. Mortgage-backed securities composed of FHA-insured or VA-guaranteed
mortgage loans that are issued by private lenders and guaranteed by GNMA, an entity within HUD,
are backed by the full faith and credit of the United States.
Prior to being taken over by the government Fannie Mae and Freddie Mac were known as
                                                           non-affiliated agencies.

                                                           primary market entities.

                                                           government-sponsored enterprises
                                                           (GSEs).
                                                           lenders of last resort.

The correct answer is C. Prior to being taken over by the government Fannie Mae and Freddie
Mac were known as government- sponsored enterprises (GSEs) because they were created by
federal legislation and supported by the government, but operated independently.
On a conforming loan with a loan-to-value ratio of 90% or more, the maximum
contribution of the seller toward closing costs is
                                                         3%.

                                                         10%.

                                                         5%.

                                                         1%.
The correct answer is A. On a conforming loan with a LTV of 90% or higher, the maximum seller
contribution is 3%.

What is true of the repayment of a construction loan?
                                                          Principal and interest are paid in
                                                          installments until the work is completed.
                                                          Principal is repaid when all the work is
                                                          completed.
                                                          Interest is paid up front, when the funds
                                                          are released.
                                                          Principal is repaid in installments until the
                                                          work is completed.
The correct answer is B. Some lenders will allow all interest to be paid when the work is
completed, along with the principal. Most, however, require interest-only payments until the loan is
paid off, with a lump sum principal payment after construction is completed.
When a borrower offers his property as security for a debt, but does not give title or
possession to the lender this is called
                                                         defeasance.

                                                         a pledge.

                                                         alienation.

                                                         hypothecation.

The correct answer is D. In most states, a borrower hypothecates his real property as security for
a mortgage note. In hypothecating the property, the borrower pledges it as security, or collateral,
without actually giving up legal title or possession.
The annual MIP is
                                                       based on whether the property is in a low-
                                                       cost or in a high-cost area.
                                                       based on the borrower's credit rating.

                                                       the same for all FHA loans.

                                                       based on the loan term and loan-to-value
                                                       ratio.
The correct answer is D. FHA's annual MIP is based on the loan program, the loan term and the
loan-to-value ratio. If the term is more than 15 years (e.g., 30 years), the maximum annual MIP
FHA can charge is 1.55% if the LTV is over 95%; but, 1.50% if the LTV is 95% or less. If the term is
15 years or less and the LTV is over 90%, the premium is .50%. If the term is 15 years or less and
the LTV is 90% or less the annual MIP is .25%.
Which of the following must be licensed by the state?
                                                       A loan originator employed by a credit union.

                                                       A loan originator employed by a bank.

                                                       A loan originator employed by a savings bank.

                                                       A loan originator employed by a mortgage
                                                       broker.
The correct answer is D. A depository institution (an entity that holds savings or checking
accounts, e.g., a bank, savings bank, credit union, etc.) is regulated by a federal agency. Its loan
originators must register with the NMLS, but are not licensed; they are called registered loan
originators. Mortgage lenders and mortgage brokers are regulated by the states. Their loan
originators must be licensed by the states and registered with the NMLS.
The factors taken into account in granting a reverse mortgage are
                                                      down payment, value and income.

                                                      age, property value and interest rate.

                                                      credit, stability of income and interest rate.

                                                      income, credit and bank deposit verification.

The correct answer is B. A reverse mortgage is granted to a person older than age 62. Loan
proceeds are given to him periodically and repaid when the property is no longer his home.
Therefore, the key factors in the loan will be the value of the property, determining how much can
be loaned on the property, the interest rate being charged, and the qualifying age of the borrower.
An alienation clause in a note provides that
                                                    redemption of the loan will defeat a foreclosure.

                                                    the entire loan balance is due upon default.

                                                    upon sale of the property the loan must be
                                                    repaid, unless the lender gives consent
                                                    otherwise.
                                                    upon repayment of the debt in full the note and
                                                    mortgage will be voided.
The correct answer is C. The alienation clause (or due-on-sale clause) accelerates the payment
schedule, causing the entire loan balance to be due, upon sale of the property, unless the lender
gives consent for the loan to be assumed by the buyer.
In which way does the federal VA participate in mortgage financing?
                                                   It purchases loans made to veterans by private
                                                   lenders.
                                                  It guarantees a lender against loss in the event of
                                                  default on a VA loan.
                                                  It provides downpayment assistance to qualified
                                                  veterans for home purchases.
                                                  It primarily makes loans directly to eligible
                                                  veterans.
The correct answer is B. An approved private lender makes the loan. The VA guarantees a lender
against loss in the event of default on a VA loan. The borrower pays a funding fee to cover the cost
of the guarantee.

In determining base income, how should overtime, bonuses and commissions be entered?
                                                 Only if the applicant has been at his present job for
                                                 two years.
                                                 Only if the applicant has a written contract for the
                                                 income sources.
                                                 Only if this income is received on a consistent basis
                                                 and can be verified by the employer.
                                                 None of the above. Overtime, bonuses, and
                                                 commissions are not permissible sources of
                                                 income.
The correct answer is C. Overtime, bonuses and commissions should be entered only if this
income is received on a consistent basis and can be verified by the employer.
Which of the following is considered a liquid asset in determining the applicant's ability to
make the down payment for a mortgage loan?
                                               Term insurance cash value

                                               Funds in a money market account

                                               Electronic equipment that is to be sold on the
                                               Internet
                                               Real estate that is to be sold

The correct answer is B. Liquid assets are assets that are or can readily be converted to cash, at
their market value. Money in a money market account or fund is readily available. Cash value is a
liquid asset if the insurance has cash value; term insurance is insurance that does not have cash
value. Real property and equipment are not considered liquid assets. If they need to be sold quickly,
the seller will not receive market value.
The document that includes all borrower information is the
                                              1003.

                                              1004.
                                             HUD-1.

                                             1210.

A borrower should expect to provide federal tax returns and W-2 forms for how many previous
years?
                                            Three

                                            Two

                                            Five

                                            Six

The correct answer is B. A borrower should expect to provide the following to verify income: most
recent pay stubs showing year-to-date earnings and pay period; last two years' federal tax returns
and W-2 forms; if self-employed, a year-to-date Profit and Loss Statement prepared by his
accountant and/or corporate/partnership tax returns; partnership agreements; explanations of any
other income; copies of documents and explanations of any money owed him.
Which of the following is true of the Uniform Residential Loan Application?
                                          It must be used for all residential loans, regardless of
                                          the size of the property.
                                          It is FNMA form 1003 or FHLMC form 65, and may be
                                          used for conforming, nonconforming, FHA and VA loans.
                                          It is used only for FHA and VA loans.

                                          None of the above.

The correct answer is B. FNMA 1003/FHLMC 65 is the form number for the Uniform Residential
Loan Application. This may be used for loans that conform to Fannie Mae and Freddie Mac criteria as
well as nonconforming loans and FHA and VA loans.
Which of the following information about a borrower does not appear on a Form 1003?
                                         Credit score

                                         Assets

                                         Birthdate

                                         Liabilities

The correct answer is A. The application consists of information provided by the borrower, such
as his date of birth, assets, income, and liabilities. It does not include his credit score.
In completing FNMA 1003, net rental income from investment property is
                                        net cash flow from investment property.
                                         gross rents collected.

                                         taxable income.

                                         scheduled gross rents.

The correct answer is A. Positive net cash flow for an investment property (or the monthly
operating income for a two- to four-family property for which the applicant occupies one of the units
as a principal residence) is listed as net rental income.

The declarations section of the Uniform Residential Loan Application asks about
bankruptcy. An applicant must answer Yes/No about a declared bankruptcy, if it occurred
during the past _______ years.
                                       There is no time limit.

                                       five

                                       seven

                                       three


The declarations section of the Uniform Residential Loan Application asks about bankruptcy. An
applicant must answer Yes/No about a declared bankruptcy, if it occurred during the past _______
years.
                                      There is no time limit.

                                      five

                                      seven

                                      three


The Schedule of Real Estate Owned on form 1003 includes which type of properties?
                                    All properties currently owned by the applicant, on which there
                                    is an outstanding loan balance
                                    Only the applicant's current residence

                                    All past and current residences owned by the applicant

                                    All properties currently owned by the applicant

The correct answer is D. The Schedule of Real Estate Owned on form 1003 includes all properties
currently owned by the applicant.
If the borrower is self-employed, he may need to verify his income by providing which of
the following?
                                    Year-to-date Profit and Loss Statement

                                    Tax returns

                                    Articles of Incorporation, typically filed with the state

                                    Both A and B

The correct answer is D. If a borrower is currently self-employed he may need to include the last
two years' tax returns and balance sheets and a current year-to-date Profit and Loss Statement.

The section of the Uniform Residential Loan Application titled Information for Government
Monitoring Purposes
                                  must note the applicant's sex, race and ethnicity, based on the
                                  lender's visual observation or the applicant's surname, if the
                                  applicant refuses to provide the information.
                                  is only required to be completed if the applicant is in a protected
                                  class.
                                  is included to aid the federal government in monitoring
                                  compliance with the Fair Lending Act.
                                  is mandatory, to assure compliance with federal laws.

The correct answer is A. This section is included to aid the federal government in monitoring
compliance with the Equal Credit Opportunity Act. Since supplying this information is strictly
voluntary, an applicant who does not wish to do so should check the box provided to indicate his or
her decision. If an applicant does not provide this information, federal regulations require the lender
to note the applicant's sex and race on the form, based on the lender's visual observation or the
applicant's surname.

A borrower will usually be asked to provide monthly bank statements for the past ______
months.
                                 Zero - Bank statements are rarely, if ever, requested by a lender
                                 evaluating a loan application
                                 Two

                                 Three

                                 Six

The correct answer is B. A borrower should be prepared to provide the following "other
information": name and address of his current landlord with rent receipts for the past year;
explanation letter for any late payments, judgments, liens, bankruptcy or foreclosure; closing
statement from the sale of his current property; copies of the last two months' bank statements; if
an FHA/VA loan, a copy of his Social Security card and driver's license; if a non-resident, a copy of
his Certificate of Resident Alien Status (Green Card).
All of the following are considered liquid assets on the Uniform Residential Loan
Application EXCEPT
                                Stock and bonds

                                Net cash value of a life insurance policy

                                Bank accounts

                                Current home equity

The correct answer is D. Liquid assets are assets that are or can be quickly converted to cash at
their current value. They include the deposit made on the purchase of the property, money held in
bank accounts, life insurance net cash value, and stocks and bonds.

A borrower completing the Uniform Residential Loan Application who has any late
payments should
                              disclose them by adding pages to the form.

                              prepare an explanation letter and have it ready, if asked.

                              pay ahead on any bills from the creditor in hopes of "looking good."

                              None of the above.

The correct answer is B. Borrower should produce an explanation letter for any late payments,
judgments, liens, bankruptcy, or foreclosure.
The appraisal approach most suited to residential property is
                             the capitalization approach.

                             the gross rent multiplier approach.

                             the cost approach.

                             the market data approach.

The correct answer is D. The market data approach, also called the sales comparison approach, is
best used for properties where comparisons may be made based on sales prices, such as homes.
A credit report does not show
                           unpaid judgments.

                           derogatory payment history.

                           the borrower's Social Security number.

                           payments to creditors that have not been reported to a repository.

The correct answer is D. A repository is a credit reporting agency. Each agency can only report on
data it has received. Therefore, information that a borrower is in default on a loan will not appear on
his credit report, unless the creditor had reported it to the credit agency.
Which of the following is not an appraisal approach?
                           Comparative market analysis

                           Cost

                           Income

                           Sales comparison

The correct answer is A. The three approaches are income (for rental property), sales comparison
(for homes and land), and cost (for everything else). A comparative market analysis is used by real
estate agents to estimate sales prices for owners wanting to list their properties for sale.
When the originating lender sells the rights to collect the payments, including interest, to
another lender, the price charged in the sale is called
                         a service release premium.

                         a buydown.

                         a yield spread premium.

                         discount points.

The correct answer is A. When selling the servicing rights (i.e., the right to collect the interest) to
a loan, the originating lender may obtain a service release premium (SRP) from the purchaser.
In underwriting, among other factors, the borrower's capacity is analyzed. The
borrower's capacity refers to
                        his credit history.

                        his ability to make the monthly loan payments.

                        his ability to acquire the needed down payment.

                        the maximum loan to value ratio he can obtain.

The correct answer is B. In the borrower analysis, capacity refers to the ability to make the loan
payments. Collateral refers to the value of the property securing the loan. Capital refers to the cash
or other assets available for the down payment. Character or credit history refers to his willingness
to make payments, as evidenced by his credit history.

Why should a loan originator recommend a borrower obtain a professional inspection?
                      Because the seller is required to repair all defects detected by an inspector.

                      It makes it easier to qualify for the loan.

                      It is required by the secondary market.
                      An inspection can determine the effective life of the property’s major elements

The correct answer is D. The purpose of an inspection is to determine the condition and effective
life of the major elements of the property, such as the roof, electrical system, etc.
Which of the following is a claim of a creditor in a property?
       Easement

       Adverse possession

       Lien

       Encroachment

The correct answer is C. A lien is a claim of a creditor. A mortgage creates a voluntary lien
against the property of the mortgagor.
Which of the following types of bankruptcy involves a plan of payments to pay off one's
debts?
                    Chapter 12

                    Chapter 9

                    Chapter 7

                    Chapter 13

The correct answer is D. Chapter 13 involves a payment plan over three to five years to pay off
the debts.
The minimum number of comparables needed for a residential mortgage appraisal is
                   four.

                   six.

                   three.

                   one.

The correct answer is C. The minimum number of comparables needed for a residential mortgage
appraisal is three.
The appraisal approach in which the replacement value is calculated is the
                  cost approach.

                  income approach.

                  gross rent multiplier approach.

                  sales comparison approach.
The correct answer is A. In the cost approach, the appraiser provides separate values for the land
and for the building and adds them together to arrive at the total value of the property. The value of
the building is calculated by estimating the cost to replace the building with a new structure and
deducting the building's depreciation (i.e., factors that make it worth less than a new building).
A standard consumer credit report will always display
                 the consumer's name and Social Security number.

                 a five-year history of residence.

                 the current balance and payment history for the past five years for any open
                 account.
                 the name of a joint account holder.

The correct answer is A. The consumer's name and Social Security number appear on each credit
report. Typically, the payment history is shown for two, not five, years. While the report will show
whether an account has a joint account holder or a co-signer, it will not name that person.
The existence of which of the following can prevent or delay the closing of a sale or loan?
        Encumbrance

        Satisfaction

        Reconveyance

        Easement

The correct answer is A. An encumbrance is an interest or right of a person who is not the owner,
in a property. It can be a problem that must be cleared up prior to closing, e.g., a lien that must be
paid off.
Which of the following is true regarding the SRP?
               It is not paid to the originating mortgage broker.

               It is paid when the interest rate in the loan is less than the par rate.

               It is disclosed on the HUD-1 settlement statement.

               It is a flat fee.

The correct answer is A. The SRP is the cost a purchaser pays for the spread between the interest
rate in the loan and the par interest rate. It compensates the lender for its costs, services, financing
of any closing costs, and/or the value of the loan. It is based on the loan size, since it is a
percentage of the loan. If a loan closed at 5.5% and the par rate to purchasers was 5.25%, the
purchaser may pay one point to cover the .25% difference in the rates. However, the SRP the
investor will pay will be adjusted to account for factors creating extra risk (e.g., secondary
financing, multiple units, 95% loan-to-value ratio). Since the purchase of the loan occurs after
closing, the SRP is not disclosed in the HUD-1 settlement statement.
Property appraisals are used to determine
             the physical condition of the property.

             the borrower's ability to repay the loan.

             the condition of the title to the property.

             the market value of the property.

The correct answer is D. An appraisal is an estimate of market value, ordered so the lender is
assured that the property securing the loan provides adequate security.
A buyer offers $150,000 for a home. The property is appraised at $145,000. If he gets a
conforming loan, he will need private mortgage insurance if the loan exceeds
            $120,000.

            $116,000

            $124,000.

            $110,000.

The correct answer is B. He needs PMI if his loan exceeds 80% of the price or value, whichever is
less. In this case, take 80% of $145,000, which is $116,000.

How may net cash flow from a property that is currently rented be calculated?
          At 75% of the current rent

          At 100% of the rent the purchaser intends to charge.

          At 75% of the rent the purchaser intends to charge.

          At 100% of the current rent

The correct answer is A. For a purchase or refinance of mortgaged premises owned less than one
year, net cash flow from that property is calculated from either the amount established by the
appraiser in the Operating Income Statement (Fannie Mae form 216/Freddie Mac form 998); or 75%
of actual rent from a current lease agreement signed by the current owner and lessee of the
property.
If applicant A earns $1,600 bi-weekly and applicant B earns $1,700 semi-monthly,
         Applicant B gets paid 26 times per year.

         Applicant A earns almost $200 less per month than Applicant B.

         Applicant B earns about $70 less per month than Applicant A.

         Applicant A earns less than $40,000 per year.

The correct answer is C. A person paid bi-weekly gets a check every two weeks.
Applicant A gets paid $1,600, 26 times per year. His monthly income is determined by
multiplying 1,600 x 26 and dividing by 12. His annual income is $41,600. His monthly
income is $3,467. Applicant B is paid semi-monthly (twice a month). So he receives 24
checks per year. His annual income is $40,800 (24 x $1,700). His monthly income is
$3,400.
A portion of each payment made on an uninsured amortized loan without an
escrow account is applied to
                                                                                           interest
                                                                                           only.
                                                                                           interest
                                                                                           and
                                                                                           principal.
                                                                                           principal
                                                                                           only.
                                                                                           interest,
                                                                                           principal
                                                                                           and loan
                                                                                           fees.

A borrower has a gross monthly income of $10,000. His monthly debt payments are $1,000. If his
monthly debt ratio is 30%, his total housing expense is
                                                                              $9,000.

                                                                              $3,000.

                                                                              $2,000.

                                                                              $1,000.

The correct answer is C. Debt ratio = 30% Therefore, total debt payments (including
housing) are 30% of $10,000 = $3,000 If $1,000 of the $3,000 is for other debts, the
applicant has $2,000 in housing expense.
One way to ensure a borrower is capable of repaying his loan is to
                                                                            charge a
                                                                            below-market
                                                                            interest rate.
                                                                            ensure the
                                                                            borrower's
                                                                            debt to
                                                                            income ratio is
                                                                            reasonable.
                                                                            grant only a
                                                                            short-term
                                                                                loan.
                                                                                not make
                                                                                loans to first-
                                                                                time
                                                                                borrowers.
The correct answer is B. When underwriting a loan application, lenders use debt-to-income
and housing expense ratios to determine a borrower's capability of repaying a loan.
If a mortgagor pays $794.62 monthly to the mortgagee to be applied first on 7%
interest and the balance on the principal, how much is applied to principal when
the unpaid principal balance is $83,695.47?
                                                                              $306

                                                                              $326

                                                                              $290

                                                                              $342

The correct answer is A. Annual interest = 7% x $83,695.47 loan balance =
$5,858.6829 Monthly interest = $5,858.6829 ÷ 12 = $488.22 $794.62 - $488.22 =
$306.40
The principal balance on Doug Fish's home is currently $180,000. He has a 30-
year loan at 9%. His next monthly payment of $1500 will reduce his principal
balance by
                                                                            $162.

                                                                            $150.

                                                                            $135.

                                                                            $1,365.

The correct answer is B. To calculate the annual interest, multiply the loan balance
by the interest rate: 180,000 x 0.09 = 16,200. Then divide the annual interest by 12
months: 16,200 / 12 = 1,350. Finally, to calculate the reduction in principal, subtract
the monthly interest from the total payment: 1,500 - 1,350 = 150.
Which of the following pertains to qualification of a self-employed person?
                                                                          Income
                                                                          figures
                                                                          cannot be
                                                                          adjusted to
                                                                          reflect
                                                                          income
                                                                          trends in the
                                                                          business.
                                                                         The amount
                                                                         of income
                                                                         can be
                                                                         derived from
                                                                         the balance
                                                                         sheet of the
                                                                         business.
                                                                         The amount
                                                                         of income
                                                                         can be
                                                                         derived from
                                                                         federal tax
                                                                         returns and
                                                                         the profit and
                                                                         loss
                                                                         statement for
                                                                         the previous
                                                                         two years.
                                                                         Income is
                                                                         calculated
                                                                         based on
                                                                         earnings
                                                                         over the past
                                                                         12 months.
The correct answer is C. The income of a self-employed person (i.e., one who has a
25% or greater ownership interest in a business or receives a 1099 statement to
document his income) is generally calculated as his average income for the past two
years, derived from his federal tax returns and the year-to-date earnings from a profit
and loss statement on the business, but also taking into account income trends in the
business.
If a buyer obtains a loan with a 1/1 buydown this means
                                                                        the
                                                                        interest
                                                                        rate will
                                                                        be
                                                                        reduced
                                                                        by 1%
                                                                        in the
                                                                        first and
                                                                        second
                                                                        years of
                                                                        the loan
                                                                        term.
                                                                        the
                                                                      interest
                                                                      rate for
                                                                      the first
                                                                      year is
                                                                      1%.
                                                                      the
                                                                      buydow
                                                                      n rate
                                                                      will be
                                                                      adjuste
                                                                      d by up
                                                                      to 1%
                                                                      annually
                                                                      .
                                                                      he must
                                                                      pay 1
                                                                      point for
                                                                      a 1%
                                                                      buydow
                                                                      n in the
                                                                      interest
                                                                      rate.
The correct answer is A. The numbers indicate the rate reduction. The slash
separates years. Therefore, a 1/1 buydown indicates that the interest rate is
reduced 1% each of the first two years. A buydown described as 2/1 would
have rate reductions of 2% the first year and 1% the second year. A 3/2/1
buydown would have rate reductions of 3% the first year, 2% the second year
and 1% the third.

A lender will count in full income from all of the following sources
EXCEPT
                                                                    VA benefits.

                                                                    permanent
                                                                    disability
                                                                    income.
                                                                    income from a
                                                                    second job and
                                                                    part-time
                                                                    employment.
                                                                    unemployment
                                                                    insurance
                                                                    benefits
                                                                    received due
                                                                     to loss of the
                                                                     job he had
                                                                     held for the
                                                                     past 10 years.
The correct answer is D. If it can be shown that the following are sources of
income likely to continue, the lender will count in full government assistance;
permanent disability income; income from a second job and part-time employment;
income from pensions, trusts and Social Security; and foster care income, inherited
and guaranteed income, military income, mortgage interest differential payments,
royalty payments, seasonal income and VA benefits. Not counted as income would be
income of children, since children have no permanent obligation to contribute to the
family finances for support of the home, and their income could stop without any
notice at any time; income not reported on federal tax returns, since this may make
the applicant subject to prosecution; or unemployment insurance income received
due to a non-seasonal job loss, since this is temporary.
An applicant with $50,000 annual income wants a 30-year, $236,000 loan.
His monthly taxes and insurance are projected to be $230. If the loan factor
table shows a loan factor of 5.53 and an MIP factor of .00544, what is his
housing ratio?
                                                                   28%

                                                                   31.25%

                                                                   39.41%

                                                                   42.12%

The correct answer is C. The housing ratio is PITI divided by monthly income.
His principal and interest payment is 5.53 x 236 = 1,305.08. His MIP is 1/12 x
.00544 x 236,000 = 106.99. 1,305.08 + 106.99 + 230 = $1642.07. $1642.07
divided by monthly income of $4,166.67 ($50,000 divided by 12) = .3941 =
39.41%
The HELOC Total Loan-to-Value Ratio reflects the total of
                                                                  the
                                                                  outstanding
                                                                  loan balance
                                                                  and the draw
                                                                  amount.
                                                                  the
                                                                  outstanding
                                                                  loan balance
                                                                  plus the total
                                                                  line limit
                                                                  amount.
                                                                     how much can
                                                                     be borrowed
                                                                     under the
                                                                     HELOC.
                                                                     the HELOC line
                                                                     of credit.
The correct answer is B. With a HELOC, the outstanding loan balance plus the
total line limit amount add up to amount used in calculating the Total LTV. The
outstanding loan balance plus the actual draw is used to calculate the HELOC
Loan-to-Value (HLTV).
If a borrower had an outstanding loan balance as of April 1 of $549,287,
with monthly loan payments of $4,020, at an interest rate of 5.75%, what
would the outstanding loan balance be as of May 1?
                                                                   $545,498

                                                                   $547,899

                                                                   $546,655

                                                                   $545,267

The correct answer is B. First calculate what portion of the monthly payment is
interest and what portion is going towards principal ($549,287 x 5.75% ÷ 12 =
$2,632 [interest]; $4,020 - $2,632 = $1,388[principal]). To calculate the new loan
balance, subtract the amount of principal in the monthly payment from the previous
month's outstanding balance. Thus $549,287 - $1,388 = $547,899.
What is the front-end ratio given the following variables?
Gross monthly income: $5,300
Monthly principal and interest $1,020
Annual property taxes $3,278
Annual homeowners insurance $ 650
Monthly auto payment $ 295
                                                                  25%

                                                                  2%

                                                                  93%

                                                                  31%

If a 30-year loan is offered at a fixed interest rate of 5.75% with a 2/1 buydown, its
permanent interest rate is
                                                                 3.75%

                                                                 4.75%
                                                               2.75%

                                                               5.75%

The correct answer is D. The fixed rate (5.75%) is the permanent rate. The 2/1
buydown means that fixed rate is reduced by 2% to 3.75% the first year, and by
1% to 4.75% the second year. Starting the third year, the fixed rate becomes the
permanent rate for the remainder of the loan term.
A basis point is
                                                             the same as a
                                                             discount point.
                                                             1% of the loan
                                                             amount.
                                                             one-one hundredth of
                                                             1%.
                                                             1% of interest.

The correct answer is C. The amount of change in interest rates is often
expressed in terms of basis points. A basis point is equal to one-one hundredth of
1%. Therefore, a reduction in mortgage interest rates of .25% (which is 25/100 of
one percent) is a reduction of 25 basis points.
The housing expense ratio and expense-to-income ratio for an FHA loan
are
                                                            36%/49%.

                                                            30%/41%.

                                                            31%/43%.

                                                            28%/36%.

The correct answer is C. For FHA loans the new housing expense ratio is 31%
(compared to 28% for conventional loans) and the expense-to-income ratio is 43%
(compared to 36% for conventional loans).
A borrower obtains a $150,000, 30-year loan with a fixed rate of 6.5%. If
he gets a 2/1 buydown in order to calculate the cost of the buydown, he
will have to calculate
                                                           2% of $150,000

                                                           1% of $150,000.

                                                           3% of $150,000.

                                                           monthly payments for
                                                           the loan at 4.5%, 5.5%
                                                           and 6.5%.
The correct answer is D. A 2/1 buydown indicates a 2% rate reduction the first
year and a 1% reduction the second year. The cost of the buydown is total cost of
the difference in the payments at the fixed rate and the buydown rates. The
monthly payment for a $150,000, 30-year loan at 6.5% is $948.10; at 5.5% it is
$851.68; and at 4.5% it is $760.03. Therefore, the cost of the buydown is $188.07
($948.10 - $760.03) x 12 for the first year. This amounts to $2,256.84. It is $96.42
($948.10 - $851.68) x 12 for the second year. This is $1,157.04. The total cost of
the buydown is $3,413.88.
An applicant is interested in a 30-year home mortgage with 2 points at a
fixed interest rate of 6%. The price of the house is $300,000 and the down
payment will be 20%. What is the loan amount?
                                                          $216,000

                                                          $224,000

                                                          $260,000

                                                          $240,000

The correct answer is D. If the down payment is 20% of the sales price, the loan
is 80%. $300,000 x 80% = $240,000 loan. Points, interest and term of the loan are
irrelevant.
The percentage of ownership of a business that triggers self-employment
qualification criteria is
                                                        50%

                                                        10%.

                                                        25%

                                                        100%

The correct answer is C. A self-employed person is one who has a 25% or
greater ownership interest in a business or receives a 1099 statement to document
his income.
In the calculation of an applicant's income, a capital gain can be
considered if
                                                       the borrower has
                                                       occasionally sold capital
                                                       assets.
                                                       it is a one-time occurrence.

                                                       the borrower owns
                                                       additional capital assets.
                                                        it occurred no earlier than
                                                        six months prior to the
                                                        application.
The correct answer is C. A capital gain or loss that is a one-time occurrence is
not considered in determining income. However, an average of capital gains or
losses can be considered as income when a borrower consistently turns over assets
over a sustained period (e.g., two years), and provides evidence of ownership of
additional property or assets that can be sold if extra income is needed to make
future mortgage payments.
A borrower applied for a first loan of $240,000 and a piggyback second of
$30,000 to purchase a $300,000 home. What is his LTV?
                                                      80%

                                                      90%

                                                      85%

                                                      75%

The correct answer is A. The LTV is the relationship of the first loan to the
purchase price, i.e., 240,000 ÷ 300,000 = .80 (80%).
The CLTV is the relationship of both loans to the purchase price, i.e., 270,000 ÷
300,000. It is .90 (90%).
A person buys a home for $300,000 and puts 30% down. The loan is
interest-only for the first six years. After 50 months, a reappraisal
indicates the property is now worth $280,000. What is the homeowner's
equity?
                                                     $90,000

                                                     $70,000

                                                     $300,000

                                                     $210,000

The correct answer is B. Equity is current value ($280,000) less the amount
owed. The amount owed is $210,000 (70% of the $300,000 purchase price, so the
equity is $70,000.
In the qualification of an applicant who receives child support and alimony
                                                    child support income can be
                                                    grossed up.
                                                    child support payments can be
                                                    counted in full if they have been
                                                    received over the past 15 years
                                                    for a child who is now 17 years
                                                   old and does not intend to go to
                                                   college.
                                                   child support can be included as
                                                   income, but not alimony.
                                                   this income cannot be
                                                   considered, as it is not earned
                                                   income.
The correct answer is A. Alimony, child support, and separate maintenance
payments may be counted in full if the applicant can show that payments have
been received over a period of time and are likely to continue for at least three
more years, considering the ages of the children. Furthermore, since child support
is not taxable, it can be "grossed up."
Which of the following is true of an insurance clause in a mortgage?
                                                 It specifies the type of mortgage
                                                 insurance the borrower must
                                                 obtain.
                                                 It provides that the insured must
                                                 obtain flood insurance.
                                                 It provides that if the borrower
                                                 does not keep the property
                                                 insured, the lender will pay for
                                                 the coverage and declare the
                                                 mortgage to be in default
                                                 It is required to be in the
                                                 mortgage for the mortgage to be
                                                 valid.
The correct answer is C. The insurance clause in the mortgage/trust deed will
generally require the borrower to maintain property (hazard) insurance. It also
provides that if the borrower does not pay the premium, the lender can declare a
default, pay for the coverage and require the borrower to reimburse the lender in
order to avoid foreclosure.
A float-down rate lock agreement allows the applicant to
                                                get a lower rate than the lock-in
                                                rate.
                                                change from a variable rate to a
                                                fixed rate.
                                                get a longer lock-in period.

                                                make a lower down payment.

The correct answer is A. With a float-down rate lock agreement, the rate can
"float down" but not up, so the applicant can receive a lower rate than the locked
rate.
Loan origination fees or points refer to
                                                prepaid reserves.

                                                discount points.

                                                loan fees.

                                                service release premiums.

The correct answer is C. The loan origination fee, sometimes called "points,"
covers the lender's administrative costs in processing the loan, including taking the
loan application, loan processing, underwriting and funding the loan. Often
expressed as a percentage of the loan, it will vary among lenders. Generally, the
buyer pays the fee, unless otherwise negotiated. Prepaid reserves are for taxes and
insurance. Discount points are prepaid interest. Service release premiums are fees
collected upon sale of the loan.
Special flood hazard areas are designated by
                                              FNMA.

                                              FEMA.

                                              mortgage lenders.

                                              GNMA.

In which document does a mortgagee clause appear?
                                             The note

                                             The mortgage

                                             The property insurance policy

                                             The deed of reconveyance

The correct answer is C. A mortgagee clause in an insurance policy will name the
lender as a payee, so that in the event of a covered loss, the lender can ensure that
the proceeds are applied to repairing the damage.
To meet FNMA requirements, a property must have insurance at least
equal to which of the following?
                                            100% of the insurable value of the
                                            improvements
                                            The unpaid balance of the loan

                                            The lesser of A or B.
                                            The greater of A or B.

The correct answer is C. FNMA requires that for any first lien mortgage
(excluding a reverse mortgage) the minimum hazard insurance coverage required
is the lesser of 100% of the insurable value of the improvements or the unpaid
principal balance of the mortgage, as long as it equals the minimum amount (80%
of the insurable value of the improvements) required to compensate for damage or
loss on a replacement cost basis.
John Johnson obtained a 90% loan amounting to $63,000 to buy his house.
If he had to pay 2 points for loan fees and 4 discount points for his loan,
what sum did he need for settlement?
                                           $10,780

                                           $11,200

                                           $4,200

                                           $3,780

Which of the following is credited to a borrower to pay a borrower's closing costs?
                                          Yield spread premium

                                          Loan origination fee

                                          Service release premium

                                          Prepaid expense premium

The correct answer is A. The yield spread premium is credited to a borrower
when the borrower accepts an interest rate above par i norder to pay his closing
costs. In effect, it enables the borrower to obtain financing of the closing costs.
Service release premiums are a form of compensation to a lender upon sale of a
loan in the secondary market.
With regard to flood insurance, a lender may NOT charge borrowers
                                        a fee for its life-of-the-loan tracking,

                                        the cost of a third-party service for flood-
                                        zoning determinations or tracking
                                        a fee for its flood zone determinations.

                                        a fee for its overhead when it uses a third-
                                        party service for flood-zoning
                                        determinations or tracking

If the lender determines, at any time during the life of a loan, that the property
securing the loan is located in a special flood hazard area and is not covered by
flood insurance,
                                      it must foreclose.

                                      it must accelerate its payment schedule.

                                      it must cancel its insurance requirement.

                                      it may force place the insurance coverage if
                                      the borrower does not promptly purchase it.
The correct answer is D. If the lender determines, at any time during the life of a
loan, that the property securing the loan is located in a special flood hazard area
and is not covered by flood insurance, it must instruct the borrower to obtain flood
insurance or force place the insurance (i.e., purchase the insurance on the
borrower's behalf) and charge the borrower the cost if the borrower fails to
promptly purchase the required insurance himself.
Which of the following determines whether flood insurance is required for
a particular property?
                                     FEMA

                                     The lender

                                     The appraiser

                                     The title company

The correct answer is B. FEMA produces the maps showing the flood plains, but
does not determine whether a particular property is in a flood plain. The lender is
charged with the responsibility for making this determination. It may do so directly
or pay for a third-party to do the work.
An applicant has a lock-in agreement providing for an interest rate of 5.5%
per annum for 15 years. If interest rates offered by the lender increase by
0.5% during the lock-in period the interest rate for the applicant's loan will
be
                                   5.5%

                                   6.0%

                                   6.5%

                                   5%

The correct answer is A. Since the rate was locked in, it does not increase for the
borrower.
When a property is located in a flood plain, the borrower must maintain
flood insurance for how long?
                                  Until the loan is paid down to 80% of the value
                                 As long as there is a balance owing on the
                                 mortgage
                                 Until the loan is paid down to 50% of the value

                                 Until the loan is paid down to 90% of the value

The correct answer is B. The National Flood Insurance Act of 1968 and Flood
Disaster Protection Act of 1973 prohibit a federally regulated lender from making a
loan secured by improved real estate or a mobile home in a special flood hazard
area, unless the security is covered for the term of the loan by flood insurance.
Which of the following is true of flood insurance to cover property securing
a loan from a federally regulated lender?
                                It is never required.

                                It is required only if the lender requires it.

                                It is required for all such properties.

                                It is required if the property is in a flood hazard
                                area.
The correct answer is D. If a property is in a flood hazard area, the owner must
obtain flood insurance. An owner will be charged a fee for a service to determine
whether the property is in a flood zone, as well as an initial insurance premium at
closing and an ongoing annual premium for any required flood insurance. If a
lender requires an escrow for taxes, insurance premiums, fees or other charges,
then it must also use escrow for required flood insurance premiums. The National
Flood Insurance Act of 1968 and Flood Disaster Protection Act of 1973 prohibit a
federally regulated lender from making a loan secured by improved real estate or a
mobile home in a special flood hazard area, unless the security is covered for the
term of the loan by flood insurance.
A borrower would pay discount points at closing in order to
                               finance his closing costs.

                               receive a discount on his prepaids.

                               cover the origination fee.

                               reduce the note rate below the current market rate.

The correct answer is D. Discount points are prepaid interest. They are paid in
order to reduce the note (interest) rate for the term of the loan.
In the HUD-1, escrow account deposits include
                             flood insurance premiums.

                             an assumption fee.
                             a loan origination fee.

                             a recording fee.

The correct answer is A. Hazard insurance, including flood insurance premiums
to be placed in an escrow account, is listed in section 1000 (as part of Escrow
Account Deposits).
The HUD-1 settlement statement is provided to the
                            the seller only.

                            third-party providers.

                            the buyer and the seller.

                            the buyer only.

The correct answer is C. The HUD-1 is provided to the buyer and the seller.
Separate copies of the HUD-1 are prepared for the borrower and the seller. Copies
of the same statement need not be given to both. Copies are not required for third-
party providers.
Which law requires disclosure of settlement costs in a HUD-1 Settlement
Statement?
                           Equal Credit Opportunity Act (ECOA)

                           Truth-in-Lending Act (TILA)

                           Uniform Settlement Act (USA)

                           Real Estate Settlement Procedures Act (RESPA)

The correct answer is D. RESPA requires disclosure of settlement costs in a HUD-
1 Settlement Statement, also known as the closing statement, in a mortgage loan
transaction. The HUD-1 is prepared by the settlement agent.
The HUD-1 settlement statement is also known as the
                         operating income statement.

                         credit statement.

                         finance statement.

                         settlement or closing statement.

The correct answer is D. RESPA requires the disclosure of a HUD-1 Settlement
Statement, also known as the settlement (closing) statement, in a federally related
mortgage loan transaction.
Funds paid into escrow are shown on the
                        mortgage servicing disclosure.

                        HUD-1 Settlement Statement.

                        Good Faith Estimate.

                        Truth in Lending disclosure.

A borrower may request a copy of his HUD-1 settlement statement how many days
prior to closing?
                      Five business days

                      One week

                      One month

                      One business day

The correct answer is D. A borrower may request a copy of the HUD-1 one
business day prior to closing.
A borrower has paid the fee for the credit report before closing. How is this
fee noted in a HUD-1 statement?
                     Paid outside of closing

                     Paid before closing

                     Paid to seller

                     Paid to lender

The correct answer is A. Some fees may be listed on the HUD-1 to the left of the
borrower's column and marked "POC." Such fees as those for credit reports and
appraisals are usually paid by the borrower before closing/settlement.
The borrower has the right to inspect the HUD-1
                    one week before settlement

                    at settlement.

                    48 hours before settlement.

                    one business day before settlement.

The correct answer is D. The borrower has the right to inspect the HUD-1 one
business day before the settlement. The fully completed HUD-1 Settlement
Statement generally must be delivered or mailed to the borrower at or before the
settlement. When the borrower and the seller do not both attend the settlement, it
is to be mailed or delivered as soon as practicable after settlement.
Who is responsible for preparing the HUD-1?
                     Settlement agent

                     Mortgage broker

                     Title insurance company

                     Loan originator

The correct answer is A. RESPA requires the disclosure of a HUD-1 Settlement
Statement, also known as the closing statement, in a mortgage loan transaction.
The HUD-1 is prepared by the person responsible for the closing (the settlement
agent).
A consumer has the right to inspect his HUD-1 Settlement Statement how
many business days prior to closing?
                 7

                 5

                 10

                 1

The correct answer is D. One business day before the settlement, the consumer
has the right to inspect the HUD-1 Settlement Statement.
Charges for survey fees appear in which section of the HUD-1 settlement
statement?
                Government recording and transfer charges

                Title charges

                Settlement charges

                Additional settlement charges

The correct answer is D. Charges for survey fees appear in the additional
settlement charges section of the HUD-1 (1300).
On a HUD-1, the money already paid by the borrower and which is to be
applied against the purchase price of the property is called
              earnest money.

              equity.

              new loan amount.

              escrow payment.

The correct answer is A. Section 200 of the HUD-1 lists amounts paid by or on
behalf of the borrower, including the deposit of earnest money (which is used to
show the buyer's good faith and is applied to the purchase price at closing) made
with the buyer's offer to purchase, as well as any financing, whether by a loan or
assumption of the seller's existing loan.
When a deposit is paid outside closing, the closing statement will show the
deposit as
             VOE.

             POC.

             VOD.

             DOC.

The correct answer is B. When an earnest money deposit has been paid directly
to the seller outside of closing, the closing statement will show the deposit as "POC"
(i.e., paid outside closing).
The charges in a final HUD-1 statement must be entered as
            estimated dollar amounts.

            actual dollar amounts.

            estimated percentages of the loan amount.

            actual percentages of the loan amount.

The correct answer is B. All charges on the final HUD-1 must be entered as
actual, not estimated, dollar amounts.
Which fee would appear in section 800 (Items Payable in Connection with
Loan) of the HUD-1?
           Property taxes

           Appraisal fee

           Title insurance charges

           Hazard insurance premium

The correct answer is B. Section 800 shows Items Payable in Connection with
Loan. These are the fees that lenders charge to process, approve and make the
mortgage loan, including the loan origination fee, loan discount, appraisal fee,
credit report, lender's inspection fee, mortgage insurance application fee,
assumption fee and mortgage broker fee.
The HUD-1 settlement statement includes all of the following EXCEPT
         title examination fees.

         down payment.
         property price.

         housing expense ratio.

The correct answer is D. The HUD-1 includes money owed and paid at closing,
including title charges, property price and down payment. The housing expense
ratio used in evaluating the borrower's application has nothing to do with funds at
closing.
The Private Mortgage Insurance (PMI) disclosure states that PMI is
required to be maintained for a mortgage loan
                                                                                        if the property
                                                                                        is more than
                                                                                        20 years old.
                                                                                        as long as the
                                                                                        loan is less
                                                                                        than 80% of
                                                                                        the original
                                                                                        value of the
                                                                                        property.
                                                                                        if the
                                                                                        borrower has
                                                                                        chosen an
                                                                                        adjustable
                                                                                        mortgage
                                                                                        rate.
                                                                                        as long as the
                                                                                        loan is more
                                                                                        than 80% of
                                                                                        the original
                                                                                        value of the
                                                                                        property.
The correct answer is D. PMI is required as long as the loan is more than 80% of the original
value. The original value is the lesser of the purchase price or the appraised value of the property at
the time the loan was closed. However, for refinancing, the original value is the appraised value
relied on by the lender when approving the new loan.
The premium paid for Private Mortgage Insurance is
                                                                                           refunded
                                                                                           when the
                                                                                           insurance
                                                                                           is
                                                                                           canceled.
                                                                                           added to
                                                                                           the
                                                                                        borrower'
                                                                                        s monthly
                                                                                        mortgage
                                                                                        payment.
                                                                                        paid to
                                                                                        the
                                                                                        lender as
                                                                                        part of its
                                                                                        loan
                                                                                        processin
                                                                                        g fee.
                                                                                        shared by
                                                                                        the
                                                                                        lender
                                                                                        and the
                                                                                        mortgage
                                                                                        broker.
The correct answer is B. The premium for the insurance is added to the amount due for
principal and interest and included in the loan payments. The lender then sends the premium to
the insurance company.
If a borrower is current on his 30-year home mortgage, the earliest time his private
mortgage insurance will automatically terminate is
                                                     when his loan balance is scheduled to be 20%
                                                     of the property's original value.
                                                     upon full repayment of the loan.

                                                     when his loan balance is scheduled be 78% of
                                                     the property's original value.
                                                     at the end of 10 years.

All of the loans below are covered by HOEPA EXCEPT
                                                  the total fees and points payable by the
                                                  consumer at or before closing exceed the
                                                  greater of $583 or 8% of the total loan
                                                  amount.
                                                  a first mortgage with an APR which is 8
                                                  points higher than U.S.Treasury securities
                                                  of comparable maturity.
                                                  a second mortgage where the APR
                                                  exceeds by more than 10% the rates in
                                                  U.S. Treasury securities of comparable
                                                  maturity.
                                                    a home equity line of credit.

The correct answer is D. HOEPA rules primarily affect refinancing and home equity
installment loans that also meet the definition of a high-rate or high-fee loan. The rules do
not cover loans to buy or build a home, reverse mortgages or open-end loans (e.g., home
equity lines of credit.
In order to avoid having private mortgage insurance a homebuyer must put down
at least what percentage of the lesser of the home's appraised value or price?
                                                  10%.

                                                  20%.

                                                  30%

                                                  25%.

The correct answer is B. Private mortgage insurance (PMI) is generally required by a
lender when the down payment on the purchase of a home is below 20% of the lesser of
the home's total value or the purchase price.
Why would a consumer wanting to buy a home with a 10% down payment, get a
first mortgage loan for 80% of the home's value and a home equity loan for 10%
of the home's value?
                                                 To avoid paying PMI

                                                 So the interest rate for the first mortgage
                                                 loan would be below current market rates.
                                                 So the interest rate for the home equity
                                                 loan would be below current market rates.
                                                 So he can get a second loan as soon as
                                                 the 10% home equity loan is paid off.
The correct answer is A. This describes a piggyback loan used to enable a borrower to
obtain financing with less than 20% and still avoid paying for mortgage insurance.
If Private Mortgage Insurance (PMI) is paid by the lender, the lender MUST
provide a written notice to the borrower stating the
                                               advantages of lender-paid PMI.

                                               differences between lender-paid and
                                               borrower-paid PMI.
                                               cancellation date of PMI.

                                               ways in which a yield spread premium
                                               affects PMI.
The correct answer is B. The lender can allow PMI to be paid by the borrower, or
require that it be paid by the lender. If lender-paid PMI is required, the lender must
provide a disclosure explaining the differences between lender-paid and borrower-paid
PMI.

When a homeowner's equity position reaches 20% of the original value of the
property
                                             the lender must immediately cancel the
                                             PMI.
                                             the PMI automatically cancels after 60
                                             days.
                                             within 60 days of receipt of a cancellation
                                             request, the lender must cancel the
                                             insurance.
                                             the homeowner can request cancellation of
                                             the PMI.
The correct answer is D. The Homeowners Protection Act (HPA) provides that a
borrower with a good payment history has the right to request in writing the
cancellation of the PMI when he pays down his mortgage to the point that it equals
80% of the original purchase price or the appraised value of his home at the time the
loan was obtained, whichever is less. Otherwise, PMI coverage is automatically
cancelled once the borrower pays down his mortgage to 78% of the value if the loan
payments are current, or when a loan that is current reaches the midpoint of its
amortization period (e.g., after 180 payments of a 30-year loan).
For which type of loan must a lender, prior to consummation of the
transaction, disclose that the borrower does not have to complete the loan
agreement just because he applied for the loan and that he could lose his
home if he does not make his payments?
                                           ARM

                                           High-interest home equity loan

                                           VA

                                           FHA

The correct answer is B. Not less than three business days prior to consummation
of a transaction that is subject to HOEPA a lender must give the following disclosure:
"You are not required to complete this agreement merely because you have received
these disclosures or have signed a loan application. If you obtain this loan, the
lender will have a mortgage on your home. You could lose your home, and any
money you have put into it, if you do not meet your obligations under the loan."
The advantage of PMI to a lender is that it ensures that the
                                          property is
                                          insured
                                          against
                                          property
                                          damage
                                          losses.
                                          borrower
                                          will pay
                                          tax and
                                          insurance
                                          premium
                                          money to
                                          the insurer
                                          with his
                                          monthly
                                          payment.
                                          borrower
                                          cannotr
                                          get a
                                          subordinat
                                          e
                                          mortgage
                                          loan from
                                          another
                                          lender.
                                          lender is
                                          protected
                                          against
                                          financial
                                          losses if
                                          the
                                          borrower
                                          defaults on
                                          payments.

The HPA requires that a lender or servicer notify a
consumer of his rights regarding PMI
                                         at the time of
                                         loan closing.
                                         monthly.

                                         at the time of
                                         taking a loan
                                         application.
                                         when the
                                         loan amount
                                         is down to
                                         80% of the
                                         property sale
                                         price.
The correct answer is A. The HPA requires that a
lender or servicer notify a consumer of his rights at
loan closing, annually, and upon cancellation or
termination of PMI.
HOEPA applies to which type of high-cost loan?
                                        Open-end line
                                        of credit
                                        secured by a
                                        principal
                                        residence
                                        Reverse
                                        mortgage
                                        Construction
                                        loan secured by
                                        a principal
                                        residence
                                        Second
                                        mortgage
                                        secured by a
                                        principal
                                        residence
The correct answer is D. The loans covered under
HOEPA may be called Section 32 loans because that is
the section of Regulation Z in which they are defined.
They are usually refinances or home equity loans with
high interest rates or high up-front costs. A Section 32
loan is defined as a closed-end loan secured by the
borrower's principal residence (but not a reverse
mortgage or a loan used for purchase or construction
of the residence) with an APR that is more than 8% for
a first lien loan, or 10% for a subordinate lien loan,
above the yield on Treasury securities having
comparable maturity periods; or with total fees and/or
points exceed the greater of 8% of the total loan
amount or an annual minimum threshold ($579 for
2010) set by the Federal Reserve Board.
In a fixed-rate mortgage loan, what percent of
the original value of the property must the
homeowner's equity position reach for the
Private Mortgage Insurance (PMI) to be
cancelled automatically?
                                     26%

                                     22%

                                     20%

                                     24%

The correct answer is B. The Homeowners Protection
Act (HPA) provides that a borrower with a good payment
history has the right to request in writing the
cancellation of the PMI when he pays down his mortgage
to the point that it equals 80% of the original purchase
price or the appraised value of his home at the time the
loan was obtained, whichever is less. Otherwise, PMI
coverage is automatically cancelled once the borrower
pays down his mortgage to 78% of the value (so his
equity is 22%) if the loan payments are current, or
when a loan that is current reaches the midpoint of its
amortization period (e.g., after 180 payments of a 30-
year loan).
Which of the following options is an alternative to
a piggyback second mortgage?
                                    Mortgage insurance

                                    Tax credits

                                    Lower downpayments

                                    Credit card advances

The correct answer is A. A borrower wanting a loan
with less than 20% down might choose between a loan
with mortgage insurance and combination financing (or
piggyback loans). Piggyback financing is an 80% first loan
with either a 20% second loan, or a 15% second loan
with a 5% downpayment or a 10% second loan with a
10% downpayment.
PMI protects
                                   a borrower against
                                   natural disasters.
                                   a borrower against
                                   lender bankruptcy.
                                   a lender against losses
                                   due to foreclosure.
                                   a lender against
                                   damage to the property.
The correct answer is C. A purchaser who borrows more
than 80% of the value or price of a home (i.e., puts less
than 20% down) generally must pay for mortgage
insurance to protect the lender against loss in the event of
default. For a conventional loan, the mortgage insurance is
called private mortgage insurance (PMI).
Once a person registers his phone number on the
federal do-not-call list, how long will it remain there?
                                  Until he removes it or
                                  phone service is
                                  discontinued
                                  Three years

                                  One year

                                  Five years

The correct answer is A. Once registered, a phone
number (including a cell phone number) remains in the list
until the registrant removes it or phone service is
discontinued.
Mr. Jones' loan application has been denied and the
loan originator provides him with an Adverse Action
Notice as required by ECOA. Which of the following
pieces of information would NOT be included on the
notice?
                                 The applicant's credit score

                                 Information on the credit
                                 reporting agency if the
                                 adverse action is based on
                                 his credit report
                                 The applicant's right to a
                                 statement of specific reasons
                                 for the action.
                                 Statement of the action taken

The correct answer is A. The adverse action notice required
by ECOA incudes (1) a statement of the action taken; (2) the
ECOA Notice ("The Federal Equal Credit Opportunity Act
prohibits creditors from discriminating against credit
applicants on the basis of race, color, religion, national origin,
sex, marital status, age (provided the applicant has the
capacity to enter into a binding contract); because all or part
of the applicant's income derives from any public assistance
program; or because the applicant has in good faith exercised
any right under the Consumer Credit Protection Act. The
Federal agency that administers compliance with this law
concerning this creditor is (name and address as specified by
the appropriate agency listed in appendix A of this
regulation)"; (3) the name and address of the federal agency
that administers compliance with respect to the loan
originator; (4) the applicant's right to a statement of specific
reasons for the action, provided within 30 days after the
creditor's receipt of an applicant's request, made within 60
days after the notification, and the identity of the persons or
office from which the statement may be obtained.
Who is responsible for ensuring that reporting of a
consumer's credit standing and reputation protects his
right to privacy?
                                   Federal Trade Commission

                                   Consumer reporting agency

                                   Mortgage broker

                                   Loan originator

The correct answer is B. A CRA is responsible for ensuring
that the reporting of a consumer's credit standing and
reputation protects his right to privacy. It may not supply
information about a consumer to his employer or a prospective
employer without his consent. Only people with a legitimate
business need as recognized by the FCRA can get a copy of a
consumer's report.
ECOA requires that an applicant be informed about
action taken on his completed loan application within
how many days of its filing?
                               3

                               14

                               7

                               30

The correct answer is D. An applicant has a right to know
whether his application was accepted or rejected within 30 days
of filing a complete application.
Without violating the Equal Credit Opportunity Act a loan
originator may discount or refuse to consider an
applicant's income because
                            it is from public assistance.

                            of his age.

                            it is part-time employment.

                            it cannot be documented.

The correct answer is D. A loan originator may not refuse to
consider income due to age, from public assistance or from part-
time employment. He can require that the applicant provide proof
of the income claimed.
The Fair Credit Reporting Act defines companies that
gather and evaluate consumer credit records as
                           credit bureaus.

                           consumer reporting agencies.

                           underwriting agencies.

                           loan processors.

The correct answer is B. In the Fair Credit Reporting Act, the
organizations that assemble and evaluate consumer credit are
called consumer reporting agencies.
ECOA is enforced by the various federal agencies that
regulate the different types of lenders/creditors. The agency
that drafts and interprets the regulations implementing
ECOA is
                         the Office of Thrift Supervision.

                         the Federal Trade Commission.

                         the Board of Governors of the Federal
                         Reserve.
                         the Department of Justice.

The correct answer is C. Under the ECOA, the Federal Reserve
Board is responsible for drafting and interpreting the implementing
regulation. The regulation is Regulation B.
The FTC's Telemarketing Sales Rule requires that persons
who engage in telemarketing
                        only call former or current customers for
                        leads for origination.
                        call no one on a do-not-call list.

                        establish policies and procedures to ensure
                        compliance with the rule.
                        register with the FTC to engage in such
                        practices.
The correct answer is C. A person engaged in telemarketing may
call former and current customers even if they are on a no-call list,
unless they indicate they do not wish to be called by that person. A
telemarketer may also call anyone who is not on a no-call list. The
telemarketer must establish policies and procedures and train
employees to ensure compliance with the rule (e.g., check the federal
and company no-call lists, enter persons on the list who specify they
do not wish to be called, etc.)
In an individual lawsuit, a violator of ECOA is subject to
punitive damages of up to
                       $100,000.

                       $25,000.

                       $50,000.

                       $10,000.

The correct answer is D. ECOA can be enforced through
administrative action by the agency regulating the creditor or through a
civil lawsuit. A violator is subject to actual damages, reasonable
attorneys' fees and costs of the plaintiff, and punitive damages of up to
$10,000 in an individual lawsuit, or the lesser of $500,000 or 1% of the
violator's net worth in a class action lawsuit.
ECOA requires that a mortgage loan applicant who is denied
credit must be given an appraisal disclosure, notifying him of
his right to get a copy of his appraisal report, within how many
days of his loan application?
                      30 days

                      120 days

                      90 days

                      60 days
The correct answer is A. If a copy of the appraisal is not given
immediately, the disclosure giving notice of the right to get the appraisal
must be given no later than at the time the notice of action taken is
given, within 30 days of receipt of the application.
The purpose of the Fair Credit Reporting Act is to
                       lower the cost of credit reports.

                       help consumers shop for credit agencies.

                       ensure the accuracy of information in consumer
                       reports.
                       enable consumers to improve their credit scores.

The correct answer is C. The Fair Credit Reporting Act (FCRA), enforced
by the Federal Trade Commission, is designed to ensure the accuracy and
privacy of the information in consumer reports.
Which of the following is NOT a mortgage loan subject to coverage
under the Home Mortgage Disclosure Act (HMDA)?
                   A loan to purchase a mobile home or multi-family
                   dwelling
                   A home improvement loan made for the purpose of
                   repairing, rehabilitating, or remodeling a dwelling
                   A loan to purchase a condominium unit

                   A home equity loan used to pay off outstanding medical
                   bills
The correct answer is D. The following types of mortgage loans are
subject to coverage under HMDA: a home purchase loan for any residential
dwelling, including a condominium unit, mobile home, manufactured home,
or multi-family dwelling; a home improvement loan made for the purpose
of repairing, rehabilitating or remodeling a dwelling; and the refinancing of
a home loan previously covered by HMDA (e.g., a new loan refinancing a
loan that was a home purchase or home improvement loan would be
covered, but refinancing of a home equity loan not involving home
improvement would not be covered).
A lender must provide a copy of the appraisal to an applicant within
how many days after receipt of a written request from an applicant
who has paid for the appraisal?
                  30

                  45

                  20
                    60

The correct answer is A. An applicant is entitled to a copy of the property
appraisal, if the loan was to be secured by a one-to-four family dwelling, so
that he may see if it contains accurate information. The lender must either
give him a copy or notify him of his right to request a copy no later than
when the notice of action was provided (i.e., within 30 days of receipt of the
loan application). The lender must provide the copy of the appraisal, within
30 days of receipt of a written request, if the request is received within 90
days of the notice of action.
ECOA requires that a mortgage loan applicant must be given an
appraisal disclosure, notifying him of his right to get a copy of his
appraisal report,
                any time during the application process.

                within seven business days after notice of action taken on the
                application.
                no later than the time of the notice of action taken.

                within seven business days of the application.

The correct answer is C. ECOA requires that a mortgage loan applicant who
had paid for the appraisal must be given an appraisal disclosure, notifying him
of his right to get a copy of his appraisal report, if he has not been given it
already, by the time he is given the notice of action taken on the application.
The notice of action taken must be given within 30 days of receipt of a
completed application.
ECOA requires that a creditor must provide a copy of the appraisal
report to a mortgage loan applicant who is denied credit, if the report
is requested within how many days of the notice of action taken?
               180

               60

               30

               90

The correct answer is D. ECOA requires that a creditor must provide a notice
of a right to a copy of the appraisal report within 30 days of receipt of the
application and provide the applicant with a copy if it is requested within 90
days of the notice of action taken.
Under HMDA, what is the term for an application for a home purchase
loan in which the lender, after a comprehensive analysis of the
applicant's creditworthiness, issues a written commitment to make a
home purchase loan up to a specified amount, subject to the home's
appraisal?
              Prequalification request.

              Credit evaluation request

              Loan application

              Preapproval request

The correct answer is D. The HMDA requires that for all home purchase loans
and applications, lenders must report whether a preapproval was requested and,
if so, report denials of such preapproval requests. A request for preapproval is an
application for a home purchase loan in which the lender, after a comprehensive
analysis of the applicant's creditworthiness, issues a written commitment to
make a home purchase loan up to a specified amount, subject to the home's
appraisal.
The federal agency that oversees the Federal Do-Not-Call Registry is
             the Commerce Department.

             the Office of Homeland Security.

             the Federal Trade Commission.

             the U.S. Department of Housing and Urban Development.

The correct answer is C. The Federal Trade Commission (FTC) authorized the
development of a national Do-Not-Call Registry. It is responsible for overseeing
the Registry.
The Federal Trade Commission's Red Flag Rules implement
           the Truth-in-Lending Act.

           the Patriot Act.

           the Secure and Fair Enforcement for Mortgage Licensing Act.

           the Fair and Accurate Credit Transactions Act.

The correct answer is D. The Red Flag Rules implement the Fair and Accurate
Credit Transactions Act (FACTA). They require financial institutions (including
mortgage lenders) and creditors that hold any consumer account, or other account
for which there is a reasonably foreseeable risk of identity theft, to develop and
implement an Identity Theft Prevention Program.
All of the following are included in an ECOA adverse action notice EXCEPT
                                                                                      names and/or
                                                                                      contact numbers
                                                                                      for consumer
                                                                                      credit counseling
                                                                                  agencies.
                                                                                  a statement of the
                                                                                  action taken.
                                                                                  name and address
                                                                                  of the federal
                                                                                  agency
                                                                                  administering the
                                                                                  loan originator's
                                                                                  compliance with
                                                                                  ECOA.
                                                                                  the ECOA notice.

The correct answer is A. An ECOA adverse action notice must contain a statement of the action
taken, a statement of the provisions known commonly as the ECOA Notice, the name and address of
the federal agency that administers compliance with respect to the loan originator, and the
applicant's right to a statement of specific reasons within 30 days after the creditor's receipt of a
request made within 60 days after the notification and the identity of the persons or office from
which the statement may be obtained (if the reasons are not automatically provided).
A loan applicant decides to withdraw his loan application. However, he requests a copy of
the appraisal from the lender. Is he entitled to a copy?
                                                                              Yes, if he
                                                                              has paid
                                                                              or will
                                                                              pay for
                                                                              the
                                                                              appraisal
                                                                              No,
                                                                              because
                                                                              the
                                                                              lender did
                                                                              not take
                                                                              adverse
                                                                              action on
                                                                              his
                                                                              applicatio
                                                                              n
                                                                              No,
                                                                              because
                                                                              he
                                                                              withdrew
                                                                              his
                                                                              applicatio
                                                                              n
                                                                              Yes,
                                                                              regardles
                                                                              s of
                                                                              whether
                                                                              he pays
                                                                              for the
                                                                              appraisal
The correct answer is A. If the applicant pays for the appraisal, he is entitled to a
copy. ECOA provides that the creditor must provide a copy of the appraisal either
routinely or upon request made within 90 days of a withdrawal of the application or
notice of action taken by the lender.
The Fair Credit Reporting Act provides which of the following with regard to
information provided to consumer reporting agencies?
                                                                             Only the
                                                                             consumer
                                                                             can provide
                                                                             any
                                                                             information
                                                                             for a
                                                                             consumer
                                                                             report.
                                                                             Only a
                                                                             consumer
                                                                             may provide
                                                                             negative
                                                                             information
                                                                             to a
                                                                             consumer
                                                                             reporting
                                                                             agency.
                                                                             A person
                                                                             who
                                                                             provides
                                                                             information
                                                                             that is later
                                                                             in dispute
                                                                             has a duty
                                                                             to
                                                                             investigate
                                                                             it.
                                                                             The
                                                                             consumer
                                                                             has the duty
                                                                             to
                                                                             investigate
                                                                             any
                                                                             information
                                                                             in the
                                                                             consumer
                                                                             report that
                                                                             he disputes.
The correct answer is C. Both the CRA and the information provider have
responsibilities for correcting inaccurate or incomplete information in a consumer report.
Upon receipt of the notice of dispute from the CRA, the information provider must
investigate, review all relevant information provided by the CRA, report the results to
the CRA, and if the disputed information is inaccurate, notify all nationwide CRAs so that
they can correct this information in the consumer's file.
The Fair Credit Reporting Act provides all of the following courses of action for
an identity theft victim who has submitted a valid police report to a consumer
reporting agency EXCEPT
                                                           applying for a fraud
                                                           alert.
                                                           requesting deletion of
                                                           challenged items from
                                                           the credit report.
                                                           requesting changes in
                                                           the information on the
                                                           credit report.
                                                           requiring the consumer
                                                           reporting agency to
                                                           assist in locating the
                                                           thief.
The correct answer is D. Identity theft victims who file police reports can block
fraudulent information from appearing on their credit reports, obtain copies of
business records that list fraudulent transactions carried out by an identity thief,
request a change of information or deletion of challenged items on a credit report,
or put a fraud alert on their credit files.

								
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