Pop quiz for the MLO test. This is the updated version, September 2023. Let's jump right in. Flood insurance must be purchased from whom?
The NFIP, the National Flood Insurance Program. What's the minimum and maximum amount of flood insurance needed? $100,000? and $250,000.
What's the penalty for violating ECOA? Civil penalties are $5,000 per day, misconduct $25,000, punitive damages up to $10,000, $500,000 or 1% of net worth for a financial institution. What's the four elements of a valid contract?
A valid contract has four elements, competent parties, mutual agreement, legal object, and consideration. Think of it this way. Memorize this sentence.
Competent parties are considering a mutual agreement for a legal object. What is the front-end and back-end ratios for conventional loans? 28% and 36%. What is the front end and back end ratios for USDA loans?
29% and 41%. What is the front end and back end ratios for VA loans? Back end only, 41%. What is the front-end and back-end ratios for FHA loans?
31% and 43%. An applicant can request a statement of reasons within how many days of receiving the original adverse notice. 60 days.
If an application for credit is denied based on the appraisal, the borrower has how many days to request a copy and the lender has how many days to deliver it. Borrower has 90 days to request a copy. The lender has 30 days to deliver it.
ECOA deals primarily with what? A credit application. What is included in the APR? Fees that relate to the actual mortgage. Remember, PODIUM.
P-O-D-I-U-M. PODIUM. These acronyms are so very useful.
Special shout out to Jen and Rocky and Jack and Celeste and everyone else that's part of the MLO study buddy, right? the MLO study. And if you're not connected, by the way, a little side note, if you're not already connected to the MLO study buddy group, get connected because it is an amazing free resource. All right.
So now back to this. Remember Podium, Podium, P-O-D-I-U-M, processing fees, origination fees, discount points. interest rates, underwriter fees, and mortgage broker fees. What is not included in the APR?
Fees that do not relate to the actual mortgage. Fees such as another acronym, TNACS, TNACS, title insurance, escrow, notary fee, appraisal. credit report, termite inspection, and seller credits. When do you give the servicing transfer statement and how many days does the borrower have to get the payment to the right place? No later than 15 business days before the transfer to the new servicer and the new service Lender has 15 business days after the transfer to send servicing transfer disclosure, the hello letter.
And the grace period is 60 days. No late fee can be applied. Fannie Mae requires only a blank year history to be reviewed for all credit and public information.
Seven years. Seven years. What's the minimum down payment for a FHA loan? 3.5%. borrower's credit score is 580 or higher, 10% if the borrower's credit score is between 500 and 579. At what credit score is the borrower not eligible for a FHA loan?
Below 500. What's the late fee for a VA loan? 4% of the P&I. What's the late fee for a FHA loan? 4% of the P&I. What's the late fee for a USDA loan?
4% of the P&I. What's the late fee for a conventional loan? 5% of the P&I.
How many months of PITI payments must be verified for a loan on a non-owner occupied property? Six months on a non-owner-occupied property. How many months of PITI payments must be verified for a loan on an owner-occupied property? Two months on an owner-occupied property. What percentage of ownership do you need to be self-employed?
25%. If the credit report does not show a required minimum payment amount, the lender should use an amount equal to what percent of the outstanding balance? 5%.
Commission, overtime bonus, and part-time income. must be average over how many years? Two years. Consumer debts that have less than how many months of payment remaining do not need to be included for the purpose of calculating debt ratios.
10 months. What is a 203B loan? A 203B is a FHA fixed rate loan.
Think basic, basic. What is a 203K loan? A 203K is a rehab loan.
Think thousands of dollars to rehab. What is a 203G loan? A 203G... is a special loan for teachers, firemen, emergency professionals, and police.
Think good neighbor, good neighbor. G, when you hear that 203G loan, think of the G as being good neighbor, right? Teachers, firemen, emergency professionals, and police. What are the two types of freehold estates? Fee simple.
and life estates. If a consumer requests cancellation of their escrow account, the lender must deliver an escrow closing notice no later than how many days before closure of the account. If the consumer requests the close, this notice must be received at least three business days before the consumer's escrow account.
is closed. If the close, oh, if it is closed for any other reason, when must the lender deliver an escrow closing notice? The creditor is required to provide the notice no later than 30 business days before the escrow account is closed. How long do you have? to retain the TILA disclosure, two years.
How long do you have to retain the DNC, the do not call list? 24 months, right? So basically two years, two years. How long do you have to retain the MAP, right?
The Mortgage Acts and Practices? Two years. How long do you have to retain the LE, loan estimate? Three years. How long do you have to retain the LAR, loan application registry?
Three years. How long do you have to retain the LOC? Three years. How long do you have to retain the CD? Closing disclosure, five years.
How long do you have to retain the SAR, suspicious activity reports? Five years. How long do you have to retain ECOA, Equal Credit Opportunity Act disclosure?
25 months. How long do you have to retain the affiliated business disclosure? five years.
What is warehouse funding? Warehouse funding occurs when a lender obtains funds for closing from a line of credit extended by a commercial bank. What is an estoppel letter?
Closing agent sends an estoppel letter to the seller's lender. requesting the payoff amount. Who maintains flood maps? FEMA. What is a deed in lieu of foreclosure?
A deed in lieu of foreclosure occurs when the mortgager voluntarily conveys the deed to the lender in exchange for satisfaction of the debt. Debtors still lose property, but by conveying it voluntarily before final court action, they avoid foreclosure on credit record. Lender is not obligated to accept. What is the penalty for violating FACRA? F-C-R-A.
What is the penalty for violating the... FCRA. For 2023, it's up to $1,000.
Two years after the date of violation was discovered, or within five years of the date the violation occurred. What are the four types of legal descriptions for properties? Monument method.
the US public land survey system, the lot and block survey system, which is the most common, and meet and bounds method, which is the most accurate. What is a CRT and who does it report to? A CRT is currency transaction report.
to the FinCEN, F-I-N-C-E-N. Whenever there is a suspected case of money laundry or fraud, the Bank Secrecy Act, BSA, and anti-money laundry, AML, laws require companies to file a currency transaction reports with FinCEN for cash transactions exceeding $10,000 per day. The act requires financial institutions to keep detailed records of cash transactions exceeding $10,000, withdrawing, transferring, money exchange, depositing, or transporting. Who is the C?
T.R. Currency Transaction Report. Right. The CTR. Who is the CTR under?
BSA and AML. Who are they under? U.S.
Patriots Act. The U.S. Patriots Act. A company with which a consumer has an established business relationship, an EBR, may call... for up to how many months? And what about if the consumer only has inquiries and submits an application?
So if they have an EBR, then it's up to 18 months. If it's just inquiries and the consumer submitted an application, then it's just up to three months. The DNC list must be updated every how many days?
Every 31 days. DNC must be retained for how long? Two years.
What is the penalty for sending an unauthorized fax? $500 per fax. Trouble damages of $1,500.
for knowingly doing it. What is MARS? Regulation O. Mortgage Assistance Relief Services. MARS.
Rule. The Mortgage Assistance Relief Services, MARS, rule helps to protect distressed homeowners from foreclosure prevention scams. Applies to negotiators assisting borrowers with mortgage loan modifications. Mars. No fees are collected without a blank from the borrower.
Written agreement. What does Mars prohibit? Negotiator cannot interfere with communication between borrower and lender and cannot tell borrowers to stop paying their mortgage.
The lender has how many days after closing to refund the borrower any portion of the charges that exceed the acceptable amount of tolerance levels. 60 business days. How about for non-numerical clerical errors? 60 calendar days.
TILA was implemented by who? FRB or Federal Reserve Board. Who administers TILA? The CFPB. What is loan flipping?
Loan flipping is an abusive practice in which a loan is refinanced without any tangible net benefit to the borrower, a form of equity stripping. A creditor must respond to a payoff request within how many days? Seven business days.
Who took control of Fannie Mae and Freddie Mac in 2008? Federal Housing Finance Agency, or FHFA. Who allowed it?
HERA, H-E-R-A. What is the appraisal recertification form called? Form 442. A borrower's payment history on previous mortgages and rent must be verified for how long? 12 months.
What are the eight protected classes of ECOA? So memorize it using this acronym. S. C-O-R-R-C-A-M-P. All right?
Like score camp. All right, but S-C-O-R-R-C-A-M-P. And so that is sex, color, national origin, race, religion, consumer credit protection act, age, marital status. public assistance.
You can't ask how many children on the application. You can't ask how many children, but how can you ask it? You can ask it by saying how many dependents do you have? And you can't ask if they're single, but how can you ask? You can ask are you married or unmarried or separated?
Who enforces ECOA? The CFPB. What is a defeasance clause?
The mortgage defeasance clause. All right, so the borrower paid off their loan and the lender is required to send a satisfaction mortgage notice to the borrower within 60 days of the borrower paying off the loan. What is a subordination clause.
What is a subordination clause? A mortgage subordination clause permits a senior mortgage to assume a junior lien position. What is the escalation clause? The mortgage escalation clause allows the lender to increase the interest rate of the loan under certain conditions.
What are the maximum seller concessions on conventional loans? Okay, if the LTV is over 90%, then the maximum seller concessions is 3%. If the LTV is over 75%, right, up to 90%, the maximum seller concessions is 6%.
If the LTV is... below 75%, then the maximum seller concessions is 9%. What about for investment property? What's the maximum seller concessions for an investment property? That is 2%.
What are the maximum seller concessions on FHA loans? 6%. What are the maximum seller concessions on VA loans?
4%. What are the maximum seller concessions on USDA loans? 60%.
What are the two appraisals for BA loans? NOV and CRB. Now, what does NOV stand for? Notice of value, right?
Maximum value of the property. And what does... What does...
CRD stand for? Certificate of Reasonable Value. The summary of the appraised value. What is Liz Pendence? What is Liz Pendence?
A Liz Pendence is a notice filed by the lender when it initiates a foreclosure lawsuit. What are three common disbursement plans in a construction mortgage. Voucher, fixed, warrants, VFW.
You can think of it that way, the acronym VFW, the three common disbursement plans in a construction mortgage. Think VFW, voucher, fixed, and warrants. What is a deficiency judgment?
A deficiency judgment allows the lender to claim other assets from the borrower when the proceeds of the foreclosure sale are insufficient to satisfy the mortgage lien. What is a 5-1 arm? A 5-1 arm has a fixed interest rate for five years, and adjusts annually after that.
What is FHA reverse mortgage called? H-E-C-M. Heckum?
Heckum? H-E-C-M. What does the SAFE Act stand for? Secure and Fair Enforcement of Mortgage Licensing Act.
What is the penalty for violating the SAFE Act? For 2023, the penalty is $34,000. $401.
Who enforces FACRA, the FCRA? Who enforces FACRA? Who enforces the FCRA? The FTC enforces the FCRA. Who enforces ECOA, the CFPB?
Who enforces TILA, the CFPB? Who enforces RESPA, the CFPB, previously the HUD? Who created DNC, two entities, the FCC and the FTC? Who implemented TILA, the Federal Reserve Board? Who implemented HMDA, the Federal Reserve Board?
Who created the red flag rules, the FTC and the FACTA? The FTC and the FACTA. What is the IRS Form 8821? What is the IRS Form 8821? That's the Tax Information Authorization.
What is the 4506-C? Used to be the 4506-T. What is that? The 4506-C.
What is that? That's the request for transcript of tax return. What is a QWR?
Qualified Written Request. Homeowners who are having issues with their mortgage servicers may take advantage of a provision of RESPA, whereby a borrower... may request information relating to the servicing of a loan.
It is called a Qualified Written Request, or QWR, and imposes a duty to respond to borrower's inquiries. A Qualified Written Request, QWR, requires that the lender acknowledge receipts of the request within five business days and seek to resolve the issue or concern within 30 days, right, with a 15-day extension if needed, if it's in connection to notices of error submitted by the borrower. What are...
HCML. HCMLs. What are they? A loan will be considered a high-cost Section 32 loan if its APR exceeds the APOR by more than 6.5% for a first lien of $50,000 or higher, 8.5% on a first lien less than $50,000 and or 8.5% for a subordination lien transaction.
In addition, a loan will be considered a high cost Section 32 loan. if the points and fees exceed the following thresholds. 5% of the loan amount.
for loans equal to or greater than $24,866 or 8% of the total loan amount or $1,243 for loan amounts less than $24,866. Also high cost Section 32 home loans. have the following restrictions.
Think PAPS, PAPS, P-B-A-P-S, BAPS, B-A-P-S, all right? High cost section 32 home loans have the following restrictions. And to memorize these, think about the acronym BAPS, B-A-P-S. Most balloon mortgages are... prohibited, the borrower must prove an ability to repay the loan, no prepayment penalty, and the borrower must speak to a HUD-approved housing counselor.
What are HPMLs? A loan will be considered. A high-priced Section 35 loan, if its APR exceeds the APOR by more than 1.5%, 2.5% for jumbo first lien loans, and 3.5% for subordinate liens. Section 35 high-priced loans. require the following.
Escrow accounts for the first five years can be canceled when LTV reaches 80%. No prepayment penalty unless it is limited to the first two years of the loan, and the lender must verify the borrower's ability to repay the loan. Think APE.
APE, APE, APE, ability to repay, no prepayment penalty unless it is limited to the first two years of the loan and must have escrow account for the first five years. Needs second appraisal if sold within 90 days. if the buyer paying a 10% increase in price, or if sold within 90 to 180 days, with the buyer paying a 20% increase in price.
What is another name for the GLB Act? Another name for the Graham Leach Biley Act is the Financial Services Modernization Act, 1999. Under FACRA, when can you get a free copy of your credit report? Consumers are entitled to a free copy of credit file, the report, under Regulation B, if... Information resulted in adverse action, denial. The consumer is a victim of identity theft with fraud alert.
There is inaccurate information as a result of fraud on the credit report or the consumer is receiving public assistance or unemployment benefits. TILA applies to credit transactions payable in how many installments? Five installments or more. What's the penalty for violating or what's the penalty for violation of TILA? First violation is $13,627.
Subsequent violations are $27,252. How many pages is the disclosure? How many pages is the closing disclosure?
Five pages long. How many pages is the LE? Three pages long. What is the penalty for violating GLB? Penalty for GLB, five years and $10,000 for individual and $100,000 for financial institutions.
What is a temporary 2-1 buy-down? A buy-down that allows a purchaser to reduce the interest rate on a mortgage by 2% for the first year, 1% for the next year, and 0% every year thereafter. What is a suit of quiet title?
A suit of quiet title, quiet title action, used to remove, is used... to remove a cloud on title. What is a chain of title? Chain of title is a clear, unbroken, chronological record of ownership of a specific piece of property.
What is functional obsolescence? Functional obsolescence is caused by a change in buyer's taste. What is color of title?
Color of title is the appearance of having title to personal or real property by some type of evidence, but in reality, there is either no title or it's a defective title. This person is usually not the true title owner. What are trust deeds?
And who are the three parties regarding trust deeds? So trust deeds are instruments placing specific financial interests in title to real property into the hands of disinterested third party as security for payment of the note. The borrower is called the trustor. The lender is the beneficiary who retains note and deed of trust.
The trustee holds legal title to security property described in deed of trust subject to terms of trust for lender benefit. Mortgages have judicial... Judicial... Mortgages have... Judicial...
Mortgages have judicial foreclosure and require court action to foreclose on a property. Trust deeds are non-judicial and do not require a court action to foreclose on a property. What is the 1003? That's the application, 1003. U-R-L-A. What is the 1004?
That's the appraisal. U-R-A-R. What's the 1005? That's the V-O-E. What's the 1006?
That's the V-O-D. What's the 1007? That's the V-O-R, verification of rent, rent schedule. What's the 1008?
That's the transmittal summary. What's the 1009? That's the reverse mortgage, PECM. What's Form 442, recertification of appraisal?
What are the four C's of underwriting? Capacity, capital, credit, and collateral. What are the six items that make a complete application?
Memorize this acronym, aliens, aliens, address, loan amount, income, estimated value, name, and social security number, social security number. What is the equitable right of redemption? The equitable right of redemption allows the mortgagor in default to pay the entire balance due and keep the property from being foreclosed on.
What is table funding? Table funding is a process that allows a broker to originate and close a loan under his or her name. After closing, the mortgage and note are immediately assigned to that investor.
What is a direct investor? Direct investor funding occurs when the lender deals directly with the borrower without any middlemen. What is warehouse funding? Warehouse funding occurs when a lender obtains funds from closing from a line of credit extended by a commercial bank.
What is a builder bailout scheme? A builder bailout scheme can occur when a builder or developer experiences difficulty selling his or her inventory and resorts to using fraudulent means to unload properties. What is dual tracking?
RESPA Section 6 prohibits dual tracking, which is continuing to seek foreclosure actions while the borrower is being considered for other workout. options. What are the three types of caps on arms? Initial cap, periodic cap, and lifetime cap.
What is alienation clause? The mortgage alienation clause is a provision in a mortgage enabling a lender to demand full payments if the borrower transfers the loan. What is the exculpatory clause?
The mortgage exculpatory clause prevents the lender from requesting a deficiency judgment against the borrower when the proceeds of the foreclosure are insufficient to pay off the mortgage lien. Who created the SAFE Act? The SAFE Act is part of the Housing and Economic Recovery Act, HERA, of 2008. Who created the CFPB?
So the Consumer Financial Protection Bureau, the CFPB, was created by the Dodd-Frank Act and the Consumer Finance Protection Act. What does RESPA cover? RESPA covers owner-occupied residential properties containing one to four units.
When do you give the initial escrow statements? Usually given at settlements, but lender has 45 days from settlement to deliver, sometimes referred to as the hello letter. Who enforces the FACRA, the F-C-R-A? Who enforces that?
Well, FACRA is enforced by the FTC. What does TRID not apply to, right? What does TRID not apply to? TRID rules. do not apply to these four things.
And to memorize this, think harm, harm. Trid rules do not apply to these four things. Think harm.
All cash, sales, HELOCs, reverse mortgages, mortgages for mobile homes not secured by real estate. What is the simultaneous issue? Issuing both the homeowner's and the lender's title policy at the same time is considered simultaneous issue.
Who is the guarantor? The guarantor is the owner of a property. What is HBCC?
The homeowner. Evaluation Code of Conduct, HBCC, prevents a mortgage broker from choosing the appraiser. for loans that are sold to Fannie Mae. The Dodd-Frank Act extended the law to include all mortgages. What is the secondary market?
The secondary market is for private investors and government agencies that buy or sell secondary mortgages. Can consumers get mortgages from the secondary? markets.
No, borrowers can only access mortgage products in the primary market. What does GNMA stand for and what does it mean? What's the nickname? GNMA, Government National Mortgage Association, aka GINNY MAY. right?
Who owns Ginnie Mae? Ginnie Mae is owned by HUD, the U.S. Department of Housing and Urban Development.
Does Ginnie Mae buy or sell loans or issue mortgage-backed securities, MBSs? No, Ginnie Mae does not buy or sell loans. Only... guarantees, insures government loans, right?
They do not buy or sell loans. All they do is they guarantee or insure government loans. What does Jenny Mae do? Jenny Mae guarantees or insures investors the timely payment of principal and interest on M-B- S's, right? Mortgage-backed securities, right?
Backed by federally insured or guaranteed loans. What are the loans Ginnie Mae guarantees or insures? FHA, VA, and USDA loans.
What does Ginnie Mae guarantee and what loans does it insure? So FHA insures. So it insures FHA loans and it guarantees VA loans and it guarantees USDA loans.
What is a GSE and what are two examples of GSEs? So GSE stands for government sponsored entity. And two examples are FNMA and. F-H-M-L-C. What does AUS stand for?
AUS stands for Automated Underwriting System. What is Fannie Mae's Automated Underwriting System? Desktop Underwriting, DU.
What is Freddie Mac's AUS? And what... did it used to be called?
Loan product advisor, formerly loan prospector. What is the conforming, the 2023 conforming loan limits? The conforming loan limit for 2023 is $726,200.
What are conventional mortgages? Oh, wait. Are conventional mortgages assumable? No. Conventional mortgages have a due on sale clause, right?
A alienation clause. On a conventional mortgage, can a down payment come from a gift? Yes. A company...
buy a gift letter stating that no payment is expected? Borrower needs to put 5% down of own funds. On a FHA loan, what is the minimum down payment and can it be a gift? 3.5% is the minimum down payment.
And yes, it can be a gift accompanied by a letter stating that no payment is expected. What is the definition of debt service? Debt service equals monthly principal and interest. When a borrower pays late fees, what do they pay it on?
Debt service only the principal and interest, not on taxes and interest, only PI. not PITI. What is PITI and what's another term for it?
PITI stands for principal interest taxes and insurance, right? Hazard, flood, and mortgage insurance, right? AKA monthly housing expense, right? Front end ratio or housing ratio. What is the largest property tax?
investor in the secondary mortgage market, Fannie Mae. Does Fannie Mae purchase balloon mortgages? No. What types of mortgages does Fannie Mae not purchase?
Agricultural type properties, farms, orchards, ranches, undeveloped, etc. When was Fannie Mae created and what exchange was it eventually listed on? 1938 is when it was created and it was created as a government agency.
And then eventually it was listed on the New York Stock Exchange. What is the main purpose of Fannie Mae? The main purpose of Fannie Mae is to buy mortgages and notes.
from primary lenders so money remains in circulation. How many mortgages does Fannie Mae allow on a principal property? If secured by the principal residence, there's no limitation on the number of mortgages.
How many mortgages will Fannie Mae allow on a second home or investment property? If secured by second property or investment property, a maximum of 10 properties can be financed. How many credit scores does Fannie Mae require for each borrower?
A minimum of two. Use the lower score, right? And if three scores are used, use the middle score.
This is the representative score. What is an Alt-A loan? A loan with reduced documentation, high ratio, or limited assets. What is amortization?
Amortization is fully paying off a loan in... regular payments over a period of time. Payments go towards interest and principal.
What is negative amortization? Negative amortization is when monthly payment is less than the interest due. So the unpaid interest is added to the outstanding balance. So the balance is increasing because the monthly payment... is not sufficient to cover the accrued interest from the previous month.
What is a senior mortgage? The first mortgage filed and has the superior lien position. What is a junior mortgage?
Subsequent mortgages, and so they have a more subordinate position than the senior mortgage. What is a fixed rate mortgage? An example of a fully amortized loan.
In the beginning, the majority of the payment goes to the interest, but the payments in the last few years are going to principal, more to principal. What is a balloon mortgage? A balloon mortgage is partially amortized.
Months payments are calculated as if it was a 30-year term, but the balance of the loan will come due as a lump sum. So example, 5, 7, 10 years. What is a 360-180 loan? A balloon mortgage amortized over 30 years with a lump sum payment due at 15 years.
What is an arm and what is it made of? Which part fluctuates? Adjustable rate mortgage has two parts.
Index fluctuates and margin is fixed. What is an index? Index fluctuates and is an economic indicator, right?
Lender does not control it. It's controlled by the economic indicator. What is the margin? A fixed percentage added to the index at each adjustment period.
Fully indexed rates factors in lenders'profit and overhead. What is a mortgage spread? It's the profit the lender makes. What is an adjustment period?
Adjustment period specifies the initial term before the first interest rate. Adjustment and usually adjusts every year. What is a rate cap? And explain cap 2, 3, 6. So a rate cap is how much of the...
interest rate can change at each adjustment period and over the life of the mortgage. So if we take an example of a 2, 3, 6, so that means that the first adjustment can only change up to 2%. The periodic adjustments can change up to 3%.
And the lifetime maximum is 6% of change. So what are the five banking regulators? So here's the acronym.
Think Coffin, C-O-F-F-N, right? CFPB, Office of Controller of Currency. Federal Reserve Board, FDIC, and National Credit Union Administration. What is a biweekly mortgage payment and what is the benefits? So in a biweekly mortgage payment, you're paying your mortgage every two weeks.
So example, 26 payments in a year. So that's two extra payments, right? And so the benefit is that you pay off the loan quicker. What is a term mortgage and what is the balance due at the end of the term?
So a term mortgage is a non-amortizing interest only loan and the balance is due at the end of the term as a balloon payment. What is net tangible benefit? So refinance loans must make sense for the consumers, and the cost of the commission of the loan can't be larger than the benefit the consumer receives.
What is a reverse mortgage? A non-recourse loan, a scrupulatory clause. Right.
Negatively amortizing loan for primary residences, 62 years of age or older and have a lot of equity in their home. Lenders can't go after their heirs. What is another name for reverse mortgage? Reverse annuity mortgage.
Do you need to know the qualifying ratios to give someone a reverse mortgage loan? No. You do not need to know the qualifying ratios for a reverse mortgage as the lender will look at the equity and will be paying the borrower.
What is the 2023 maximum loan limit for a reverse mortgage? Reverse mortgage limit for 2023 is $1,089,300. How old do you have to be to get a reverse mortgage?
Youngest person has to be 62 years old or older, right? Or say... The youngest person has to be at least 62 years old to convert equity in the home without selling or paying money.
What is FHA's reverse mortgage called? HECM, Home Equity Conversion Mortgage. What two disclosures are required for a reverse mortgage? GFE, and HUD.
In a reverse mortgage, what happens to the balance and equity? Equity decreases and loan balance increases. Rising debt, falling equity. What is the tenure method of payment for reverse mortgages? Reverse mortgage borrowers get a monthly check instead of paying a monthly check.
What are the income requirements for reverse mortgages? None. But the borrower has to prove that they can pay for the upkeep of the property, right? The taxes and the insurance, right? What are the factors that determine qualification, right, regarding reverse mortgage?
So here's the acronym, VIA, V-I-A, value of the property, expected interest on the loan, and age of youngest borrower. What must happen in order for the borrower to understand the reverse mortgage program? They have to speak to a HUD counselor to make sure they understand the program.
When does a reverse mortgage balance become due. A reverse mortgage comes due when the borrower dies, sells the home, doesn't live in the home for 12 consecutive months, defaults on their taxes, lets the home deteriorate, or when the last surviving borrower dies. When can a conforming loan be sold on the secondary market when they meet Fannie Mae and Freddie Mac's minimum standards? What are examples of non-conforming loans and can they be sold on the secondary market?
So examples are Alt-A loans, subprime loans. Jumbo loans, right? They cannot be sold on the secondary market. What is a graduated payment mortgage, GPM?
So in a graduated payment mortgage, payments start low and increase over time, right? Beginning lower payments equal negative amortization, right? What is a variable balance mortgage?
A VBM, variable balance mortgage, is adjustable interest rate, but payments don't change. What is seller financing? Seller extends credit to the buyer to buy the property. What is a wraparound mortgage? A wraparound mortgage is a seller financing.
loan, which remains in the seller's name. And the seller finances enough money to cover the loan balance and whatever money the borrower needs. The borrower makes the payments to the seller and the seller pays the mortgage. What is a growing equity mortgage?
A G-E-M, a GEM, a G-E-M, a growing equity mortgage. All right. So, um, Fixed rate, right, set up.
like a 30-year conventional with payments that increase regularly, has a fixed interest rate, so the loan balance is paid off more quickly. What is a teaser rate for an arm? A teaser rate for an arm is an introductory rate, very temporary, that is lower than fully indexed rate at the time of closing.
What is the floor for an arm? It's the lowest interest rate an arm may adjust. What is payment shop?
When a borrower's payment increases in a large amount at once. So that is why there is a cap, right? There's a cap. uh what is a convertible arm all right so a convertible arm is where it allows borrower to convert from an arm to a fixed rate loan uh one time during the loan what is a hybrid a hybrid what is a hybrid mortgage all right like for example a 5 slash 25 What is a hybrid mortgage?
So combination of fixed and adjustable rates and or interest only. All right. So for example, a 525, that means it's fixed for five years and adjusts annually for 25 years until the loan is paid off. How old can credit documents be on the date? the note is signed.
No more than 120 days. Okay. So in other words, no more than four months. What does FICO score stand for and what is the range of possible scores? So FICO score stands for Fair Isaac Corporation.
And the range is 300 to 850. What is permanent financing? Takeout. What is that? Once construction is complete, the loan is replaced by a fully amortizing one. What is equitable right of redemption?
So that allows the borrower, the mortgager, right, in default to pay the entire balance, avoiding foreclosure. What is a prepayment penalty clause? Borrower pays a fee if loan is paid off early.
What is an open-end clause? Allows future advances from the same loan. The government requires financial institutions to file SAR reports within how many days of detecting suspicious activity if the credit...
if the perpetrator cannot be identified and how many days if they can be identified. Okay. So if they can't be identified, then it's 60 calendar days.
If they can be identified, then it's 30 calendar days. What act requires mortgage applicants to provide their name, address, social security number, or EIN number, and a government photo ID? That's the U.S. Patriots Act.
Do conforming loans typically have prepayment penalties? No. But if there is one, it has to be disclosed on the notes, LE and CD.
Where do you find the prepayment penalty clause? LE, CD, and notes. under loan term table. Under federal law, are prepayment penalties allowed on a fixed rate QM? Yes, but only for the first three years on a fixed rate QM.
FHA requires how many months of ownership before resale? 90 days. What is a...
reconvainance deed. A reconvainance deed. is a method used to transfer a title for a property once it's fully paid.
What is a prepayment privilege clause? A prepayment privilege clause allows the borrower to pay a part or all of the loan due before it's due without penalty. What's a open-end clause?
It allows future additional advances from the same loan. What's a blanket mortgage? Covers multi-tracks of land, right? Who is an assigner?
Assigner party, okay, who is transferring contractual rights to another. They can sell the loan with servicing retained or can sell the servicing rights with the mortgage and note. Who is an assignee?
Assignee is the party who is receiving the contractual rights. Assignor is giving the title to the assignee. Who is a grantor? Grantor owner. Okay.
Grantor is the owner of a property who will grant the title to the grantee. Who is a grantee? Grantee is the party receiving the title transfer. What is a deed? A deed is a written instrument used to convey title or transfer ownership.
What is a deed restriction? So a deed restriction may be placed in the deed and control the use of the property and run with the land, right? It might go with the land and can't be discriminatory, okay?
A restrictive covenant limits the future use of the property, all right? So that's what a deed... restriction is, right? A restrictive covenant that limits the future use of the property. Who is a mortgagor?
That's the owner, the borrower, and the debtor, right? Who is the mortgagee, the lender, or the creditor? What is sweat equity?
Work done by the borrower that has value and must be listed on the appraisal to be eligible. Is sweat equity an acceptable source of funds? Sweat equity is not an acceptable source of funds. How can a homeowner stop paying flood insurance? They have to request a MAP amendment.
form from FEMA. What is forced place insurance? So if a homeowner stops and fails to keep hazard insurance, the lender can buy it, right? And charge the homeowner to cover their interest in the property, right? It covers the property, but does not cover your contents inside.
It's usually very... very expensive. Is a conventional loan assumable?
No. A conventional loan has a due on sale clause. What is the upfront funding fee for a USDA loan?
1%. Does a USDA loan have PMI and a prepayment penalty? No, there's no PMI or prepayment penalty regarding a USDA loan.
What is a COE? A COE is a Certificate of Eligibility, right? The amount of entitlements used for a VA loan.
How much is a VA bearable funding fee? For 2023, it's 2.15% and subsequent 3.3%. How can a veteran get... the funding fee waived.
If they're disabled more than 10% for surviving spouses, or if they are a Purple Heart recipient. Is a VA loan assumable and is there a prepayment penalty? Yes.
VA loans are assumable and there's no... prepayment penalty or down payment either uh how much of the purchase price is guaranteed on a va loan 25 what is the upfront mip mip what's the upfront mip on a fha loan 1.75 percent and 0.55 for Streamline. How much is insured on a FHA loan? 100%.
Is a FHA loan assumable? FHA is assumable because it does not have a due on sale clause. On a FHA loan, if the LTB is greater than 90% when the loan starts, how long will the monthly MIP last? In that case, for the life of the loan, but can be removed if the borrower paid 10% down and keeps an LTV 80% straight for 11 years, right?
Or keep LTV 80% for 11 years straight. If the LTV is 90% or below when the loan starts, how long will the monthly MIP last? 11 years.
What are four types of involuntary liens? Tax liens, mechanics liens, judgments, and attachments. Regarding outstanding debts, how much will the lender use?
of the outstanding balance on a student loan for conventional and for FHA? FNMA, 1%. FHLMA, 0.5.
And FHA, 0.5. What are reasons a reverse mortgage comes due? The borrower dies, sells the home, doesn't live in the home for 12 consecutive months, defaults on their taxes, the owner lets the home deteriorate, or when the last surviving borrower dies. What is a quarterly report of the condition of the business?
that an entity submits through the NMLS. What are the two parts of the MCR? One is a state and the other is an entity.
So this is called the Mortgage Call Report, MCR, right? The state-level residential mortgage loan activity reports completed quarterly within 45 days. of the end of the calendar quarter and the entity financial condition reports completed annually within 90 days of the company's fiscal year end.
Alimony, child support, retirement, and pension income must continue for how many years beyond application date to be used as income. three years. Which act requires mortgage applicants to provide their name, address, social security number, EIN number, and valid government-issued photo ID?
The U.S. Patriots Act. What is the IRS 8821 form? Remember this acronym, ANTIA.
Antia. All right. So what is the IRS 8821 form? Remember Antia. It's the tax information authorization.
The underwriter will consider what percent of rental income collected. 75%. Discount points are used to lower the interest rate.
Each discount point will lower the interest rate by how much? 0.25%. What is a loan that has adjustable interest rates that has Payments that never change.
Bearable balance mortgage. What act says the mortgage broker can't choose the appraiser on a loan? The Dodd-Frank Act.
What does S-F-H-A stand for? What does S-F-H-A stand for? H.A.
stand for special flood hazard area when there's a one percent chance of the area being inundated by water. Right. And so this is this is it's a it's a special flood hazard area when two or more parties buy at the same time or at different times and when their shares can be willed. What is that called? Tenants in common.
What is MARI? MARI is Mortgage Assets Research Institute. What are the reasons a reverse mortgage comes due? Owner dies, sells the home, does not live in the home for 12 consecutive months, defaults on their taxes.
The owner lets the home deteriorate. or when the last surviving borrower dies. This requires lenders to file a report regarding all loans made during the year. It's designed to help meet the housing needs of the community.
It's due every March. What's the name of that report? HMDA report. HMDA. HMDA report.
HMDA report. And the final question is this, what are the five banking regulators? Remember the acronym COFFN, C-O-F-F-N, right? CFPB, Office of Controller of Currency, Federal Reserve Board, FDIC, and National Credit Union Administration. Thank you for watching.
I'll see you next time. on the next video.