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Questions and Answers List

level questions: Level 1

Question	Answer
The term for the rate on an ARM loan that is lower than the fully indexed rate at the time of closing is:	Teaser Rate
The use of overtime or bonus income in total qualifying income	Must be based on the average over 2 years, employer must verify that income is expected to be earned by the borrower
In general, what must the borrower do to avoid having late payments reported to a credit bureau	Pay within 30 days of the due date
what is the purpose of a property appraisal	Assess the adequacy of collateral for a mortgage transaction
Under Regulation Z, which of the following disclosures is required to be provided within three business days of loan application on all adjustable rate mortgages?	CHARM Booklet
To estimate value under the cost approach the appraiser	Calculate the cost of construction minus any depreciation, plus value of the land.
Which practice is illegal under the MLO compensation rule?	A mortgage broker company receives compensation from both the creditor and geh consumer on a transaction that is then used to pay a commission to t MLO
When used in an advertisement, which of the following is NOT a "trigger term" that would require additional disclosures	APR
Achieving lower inters rate for the life of the loan by paying discount points is referred to as	Permanent buydown
What is the only fee that can be charged prior to providing a Loan Estimate to the borrower	Credit report fee
Which term is used to describe the arbitrary denial of loan applications in certain geographic areas without considering an individuals qualifications	Redlining
If a borrower is improperly required to use a specific title company or settlement agent, the maximum penalty to the violator is equal to	3 times the improperly required fee
According to Guidance on Non Traditional Mortgage Product Risk, which of the following should not be over-weighted in an analysis of borrower repayment capacity?	Credit Scores
When allowed by law, prepayment penalties are limited to a maximum of	3% of the unpaid principal balance in the first year of the loan
Under the "Red Fag" Rules.... the FTC allows all mortgage lenders to have written polices and procedures in place to address the following	Identity Theft
For purposes of delivering the Closing Disclosure, a "business day" is defined as	Any Day except Sundays and federal holidays
As they relate to permissible actions by someone other than the a loan originator, which of the following is not considered to be "general information"	Loan Terms
How should a loan originators approach the issues of home ownership and renting?	The loan originator should take time to understand the borrowers preferences
What must condominium associations do with respect to property insurance?	They are required to keep a "blanket" policy that protects the entire structure
A $200,000 interest-only loan has an interest rate of 6%. What is the monthly interest only payment?	$1,100
Which of the following is not a violation of section 8 of Regulation X?	A mortgage company providing a complimentary bottle of wine and a gift certificate for a home furnishing store to its clients at closing.
Someone who performs unsupervised mortgage related duties is called?	Independent Contractor
Which of the following would be the largest factor in determining the maximum amount for a VA loan?	The property's value
The secondary market is where	Where existing loans are bought and sold
At which website can one obtain the copy of their credit report that the credit bureau are required to provide once per year at no charge to the consumer?	annualcreditreport.com
95% is generally the maximum loan to value ratio on a purchase transaction for which of the following loan programs?	Conforming
Creditors must retain all loan estimates for a period of	Three years
Under the Equal Credit Opportunity Act, which of the following is not a protected class/Prohibited characteristics?	Handicap
Who is ultimately responsible for ensuring that the appraisal used by a lender for underwriting a loan is accurate?	The lender
What is the best description of a 2-1 loan?	A buydown loan
According to which regulation can an escrow account have a cushion in an amount equal to 1/16 of the yearly taxes and property insurance cost?	Regulation X