In a training scenario, a trainee asks which official source controls FHA single-family origination policy. What action best follows the rule?
Correct Answer
D) Use HUD Handbook 4000.1 for FHA single-family policy
Why this is correct: The rule is that FHA single-family origination policy is authoritatively found in HUD Handbook 4000.1. This handbook is the comprehensive, official source that must be consulted, not secondary documents or assumptions. Why the other choices are wrong: "Apply a different loan-program rule without checking the file facts" is wrong because it violates the requirement to apply the correct FHA policy based on the specific loan facts. "Ignore product, occupancy, LTV, or eligibility limits because the borrower prefers the loan" is wrong because FHA limits are mandatory, not optional based on borrower preference. "Treat the Government mortgage program basics FHA review as complete because the file contains a related closing disclosure note" is wrong because a closing disclosure note does not substitute for using the official handbook. Exam tip: Remember that HUD Handbook 4000.1 is the sole official source for FHA single-family policy; no other document or note replaces it.
Why This Is the Correct Answer
The correct response is "Use HUD Handbook 4000.1 for FHA single-family policy" because Lines 143-149; HUD FHA Handbook 4000.1 information page.
Why the Other Options Are Wrong
Option A: Apply a different loan-program rule without checking the file facts.
Apply a different loan-program rule without checking the file facts. is not correct because it does not apply the rule tested by this file scenario.
Option B: Ignore product, occupancy, LTV, or eligibility limits because the borrower prefers the loan.
Ignore product, occupancy, LTV, or eligibility limits because the borrower prefers the loan. is not correct because it does not apply the rule tested by this file scenario.
Option C: Treat the Government mortgage program basics FHA review as complete because the file contains a related closing disclosure note.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Memory Technique
FHA loan-program requirements: identify the rule being tested, then choose the action that documents or applies that rule before the file moves forward.
Exam Tip
Match the file facts to FHA loan-program requirements; do not choose an exception or shortcut that skips the required rule.
Common Mistakes to Avoid
- -Choosing an internal exception instead of the governing rule
- -Treating preliminary or informal facts as a substitute for required documentation
- -Answering from a familiar but unrelated mortgage topic
More Mortgage Knowledge Questions
A subordinate-lien home equity loan closes at an APR of 9.4% when the average prime offer rate for a comparable transaction is 6.1%. Does this loan meet the higher-priced mortgage loan APR threshold for a subordinate lien?
In a closing-readiness check, a risk reviewer sees facts tied to TILA Truth in Advertising. What should the file reflect?
A 5/1 ARM starts at a fully indexed rate of 4.25%, consisting of a 1.50% index plus a 2.75-percentage-point margin. It has a 2-percentage-point initial adjustment cap and a 5-percentage-point lifetime cap. At the first adjustment, the index is 3.90%. What is the new interest rate after applying the initial adjustment cap?
A compliance analyst compares the file facts with LTV Ratio Calculation during a licensing team review. Which conclusion is accurate?
A branch manager asks about a loan file because a trainee asks which official source controls FHA single-family origination policy. What should happen?
The loan team compares the file facts with ARM Cap Structures during a borrower follow-up call. Which conclusion is accurate?
A borrower has a 30-year fixed-rate mortgage with monthly principal and interest of $1,450. Property taxes increase, and taxes are paid through escrow. What can happen to the total monthly payment?
A loan has an outstanding principal balance of $240,000 and a 6% annual interest rate. Using simple monthly accrual, how much interest accrues for one month?
An annual escrow analysis for a current borrower shows a $780 shortage. One month's escrow payment is $600. The servicer elects to require repayment over the shortest installment period permitted by Regulation X for this shortage. What schedule is permitted?
What does an amortization schedule show for each scheduled payment?
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
A closing coordinator compares the loan amount with the current conforming limit before delivery. Which response should control?
Next Question
An originator tells a client that selling the loan on the secondary market lets the lender make more loans, and stops there. A trainer asks what else the client should understand about the roles involved.