General Knowledge 4

Which of the following would NOT be a red flag of the possibility of loan fraud?

A REALTOR® is involved in the transaction.

Which of the following is NOT true concerning SRP?

Brokers may receive an SRP.

How much is 1 discount point?

1% of the loan amount

What is the name of the sum of money that VA guarantees?

Entitlement

The fastest permissible closing time under MDIA is:

7 business days

What type of clause would give a lender the right to declare the entire loan balance due immediately because of borrower default or for violation of other contract provisions?

An acceleration clause

An adjustable rate mortgage has two components to it, the index and the margin. After closing, which of these cannot change?

Margin only

The type of mortgage that covers more than one parcel or lot and is often used for financing subdivision development is a:

Blanket mortgage

What type of deed guarantees of clear title and the grantor's right to convey?

Warranty Deed

Negative amortization happens when the:

payment is less than the required interest amount and the loan balance increases.

When using the comparison approach, the appraiser is attempting to:

adjust the comparable to the subject property.

As it relates to a loan and after foreclosure, the right of redemption is the right of:

The borrower to redeem their property during a limited specific time period

Which of the following is true about the index used in an ARM?

The index rate can change on the loan after settlement

If court proceedings are held at the time of foreclosure, the document that dictated the foreclosure sale was a:

mortgage.

The cost approach of an appraisal is used for all of the following EXCEPT:

To determine the cost of income, on a rental property

Which of the following documents would contain the details about the loan amount, payment, when payments are due, late penalty, interest rate, etc.?

Promissory note

When there is a clause in a mortgage that requires the borrower to pay an extra fee if the loan is paid off early, it is known as a:

prepayment penalty.

A borrower who qualifies for less favorable terms and interest rates is referred to as a:

subprime borrower.subprime borrower.

Which of the following would qualify as the best comparables for a residential dwelling?

Sold homes that are similar to the subject property

How does the secondary market help lenders?

They purchase mortgage backed securities and allow the lender to continue to lend.

Which of the following is not a major buyer in the secondary market?

FHA

If an MLO is looking to originate an FHA HECM reverse mortgage, they have to ensure that the borrower is:

At least 62 years or older

The main difference between FHA and VA is that VA:

guarantees the loan whereas FHA insures the loan.

The best description of LTV is a percentage of what?

The amount borrowed compared to the sales price or the appraised value

A 2/1 Buydown can also be called a:

Graduated Payment Mortgage

PMI, or Private Mortgage Insurance, would be used for which of the following loans?

Conventional loans

Which of the following would NEVER require mortgage insurance?

Veterans' Affairs loans

On an FHA residence loan, the borrower must occupy the premises within how many days after closing?

60 days

When obtaining hazard insurance, the lender will require a special clause to be inserted into the policy covering them from any loss. This is called?

Mortgagee clause

When verifying income for a loan, the borrower’s pay-stubs should NOT:

be handwritten by the employee.

When talking to a borrower, if they mention they own a business, they would have to be marked on the 1003 as self-employed and additional tax returns required when:

25% of the business

If a borrower paid 3 points on a loan with a loan amount of $740,000 and a sale price of $820,000, how much would the points cost?

$22,200

When evaluating their borrower's debt, which of the following would not have to be considered by the underwriter?

A personal loan with three payments remaining

When a Preliminary Title Report shows a judgment, which of the following is true?

The judgment must always be paid off.

A mortgage company is giving a borrower an FHA 1-year ARM. Which of the following is true?

The margin never changes.

A lien is released by which of the following documents?

Deed of Reconveyance

Mortgage insurance is required by the lender and varies based on risk, credit score, length of the loan, fixed or variable and the LTV. Which of the LTVs below would not be used for determining the cost of mortgage insurance?

78-80.00%

Which of the following is true concerning title insurance?

Borrowers must pay for a lender's policy.

Which of the following would not be considered a debt when determining DTI Ratios?

A cell phone bill payment

When an underwriter is manually underwriting a Freddie Mac/Fannie Mae loan without compensating factors, what is the maximum debt ratio allowed?

45%

If a property were located in a flood zone, the borrower would be required by the lender to obtain:

flood insurance.

When hazard insurance on the property lapses, what will the lender do?

Force placed insurance

UFMIP and Annual Mortgage Insurance Premium would be used for which of the following loans?

FHA loans

Using ratios of 28/36, a borrower with $714 in monthly consumer debt payments and $42,000 in annual income will qualify for a maximum housing payment of what amount?

$546

If a deed of trust is recorded, which of the following is true?

An encumbrance is created.

You can pay off a FHLMC/FNMA loan without a penalty:

any time during the life of the loan.

At what LTV is the lender required to automatically remove private mortgage insurance?

When the LTV is 78% of the original purchase price or appraised value

Which of the following is true concerning hazard insurance on a Freddie/Fannie loan?

It is required on all loan transactions.

Fannie Mae would require mortgage insurance on which of the following loans?

An 83% LTV conventional loan

The borrowers want a conventional loan for a $450,000.00 new home purchase. They do not want to pay for mortgage insurance. What is the minimum down payment that would allow for no mortgage insurance?

$90,000.00