A veteran wants to assume an existing VA loan on a property they are purchasing. The original borrower still has other VA-financed properties. What happens to the original borrower's entitlement?
Correct Answer
C) Entitlement remains tied up until the assuming borrower pays off the loan
When a VA loan is assumed by a non-veteran or veteran who doesn't substitute their entitlement, the original veteran's entitlement remains tied to that loan until it is paid in full, even though they are no longer liable for the debt.
Why This Is the Correct Answer
When a VA loan is assumed by a non-veteran or veteran who doesn't substitute their entitlement, the original veteran's entitlement remains tied to that loan until it is paid in full, even though they are no longer liable for the debt.
More Mortgage Knowledge Questions
A borrower refinances their home with a cash-out refinance loan of $750,000. The original loan balance was $400,000, and they're taking $300,000 in cash. If conforming limits allow $766,550, how is this loan classified?
A lender charges a 1% origination fee on all loans. For a borrower obtaining a $250,000 mortgage, what is the maximum origination fee that can be charged without violating the points and fees test under the ATR/QM rule for a first-lien mortgage?
A borrower is considering paying discount points to reduce their interest rate. Each point costs 1% of the loan amount and reduces the rate by 0.25%. On a $300,000 loan, how much would the borrower pay for 2 discount points?
Under TRID regulations, discount points must be disclosed on the Loan Estimate in which section?
A borrower is refinancing a $350,000 property. The existing first mortgage balance is $200,000, and they want to take $75,000 cash out. What will be the new LTV ratio?
During the draw period of a HELOC, what type of payments are borrowers typically required to make?
A borrower submits a loan application but fails to provide their Social Security number, claiming privacy concerns. The MLO has obtained the borrower's name, income, estimated property value, loan amount, and property address. According to TRID regulations, what is the status of this submission?
A borrower has a 5/1 ARM with an initial rate of 3.5%. The loan uses the 1-year Treasury index, which is currently at 2.0%, and has a margin of 2.75%. What will the borrower's new interest rate be at the first adjustment, assuming no rate caps apply?
A borrower's homeowners insurance policy is cancelled mid-term due to non-payment, but the escrow account shows the premium was paid. Investigation reveals the insurance company applied the payment to a different policy number. What should the servicer do?
A lender packages a $500,000 conventional loan that meets all current GSE standards but was originated using outdated underwriting software that didn't verify employment in the required manner. This loan would be:
People Also Study
Federal Mortgage-Related Laws
24% of exam
Mortgage Loan Origination Activities
27% of exam
Ethics, Fraud & Consumer Protection
18% of exam
Uniform State Test Content
11% of exam
Related Study Resources
Previous Question
What is the maximum debt-to-income ratio for a Qualified Mortgage under the Ability-to-Repay rule?
Next Question
A borrower has a current mortgage balance of $150,000 and wants to refinance to a new loan of $175,000. After paying off the existing mortgage and closing costs of $3,000, they will receive $22,000 in cash. What is the primary regulatory concern with this transaction?