A borrower obtained an FHA loan in 2015 with a 5% down payment and requests PMI cancellation under the HPA. How should the lender respond?
Correct Answer
B) Explain that FHA loans are not covered by the HPA
The Homeowners Protection Act only applies to conventional loans with private mortgage insurance. FHA loans with mortgage insurance premiums (MIP) are governed by separate FHA regulations and are not subject to HPA cancellation and termination provisions.
Why This Is the Correct Answer
The Homeowners Protection Act only applies to conventional loans with private mortgage insurance. FHA loans with mortgage insurance premiums (MIP) are governed by separate FHA regulations and are not subject to HPA cancellation and termination provisions.
More Federal Laws Questions
A mortgage broker's website states 'Qualified borrowers can get loans with down payments as low as 3%.' Which statement about TILA advertising requirements is correct?
A loan's APR increases from 4.25% on the Loan Estimate to 4.35% on the Closing Disclosure due to a rate lock expiration. What action is required?
A lender originates a mortgage that meets all QM requirements. Three years later, the borrower defaults and claims the lender violated the ATR rule. What legal protection does the lender have?
For a closed-end mortgage loan, when must the creditor provide the Closing Disclosure to the borrower?
Which of the following documents must be provided to trigger the start of the 3-day rescission period?
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A creditor uses a third-party automated underwriting system that approves a loan, but the loan officer discovers the borrower provided false employment information after closing. What is the creditor's QM safe harbor status?
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