General Mortgage Knowledge

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?

In a training scenario, a trainee asks which official source controls FHA single-family origination policy. What action best follows the rule?

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?

A higher-priced first-lien loan closed 3 years ago. The borrower is current and the balance is now 74% of the original value. He asks the servicer to close the escrow account. Assuming the escrow requirement applies and the loan has not been paid off, may the servicer cancel the escrow account at the borrower's request after three years?

A monthly principal-and-interest payment is $1,800, of which $1,250 is interest. How much principal is paid that month?

A borrower chooses between two otherwise identical 30-year fixed-rate loans: one at 6.0% and one at 6.5%. Which loan generally has the lower scheduled principal-and-interest payment?

A bank receives an application for a consumer-purpose, closed-end loan secured by real property. The transaction is not a reverse mortgage or another excluded loan. Which disclosure framework generally applies?

A first-lien loan above the Freddie Mac conforming limit prices at 2.2 points over the average prime offer rate. The desk asks whether the higher-priced rules bite. Does this jumbo loan's APR spread meet Regulation Z's higher-priced mortgage loan threshold?

A married couple jointly owns and occupies a home. One spouse signs a refinance secured by the home, and both spouses' ownership interests are subject to the new lien. Who generally receives the right to rescind?

After the consumer receives a Closing Disclosure, the creditor corrects a seller credit that changes cash to close but does not make the APR inaccurate, change the loan product, or add a prepayment penalty. Is a new three-business-day waiting period generally required?

One day before consummation, the loan changes from a fixed-rate product to an adjustable-rate product. What is the TRID consequence?

A comparable sold for $412,000 and has a 3-car garage. The subject has a 2-car garage, and the appraiser puts the difference at $9,000. How should the appraiser adjust the comparable's sale price for the garage difference?

An estate conveys a house to a buyer for $265,000 using a deed that warrants only against defects arising during the 6 years the deceased held title. Which deed type is characterized by warranties limited to the grantor's period of ownership?

A high-cost mortgage is drafted with a 7-year term and a balloon payment of $180,000 at maturity. The borrower has regular monthly income. Assuming none of the bridge-loan, seasonal-income, or qualifying small-creditor balloon exceptions applies, is this balloon payment permitted?

An FHA purchase closes with 3.5% down on a $290,000 price, a 30-year term, and the borrower asks how long the annual mortgage insurance runs. For an FHA case number assigned under the post-June-2013 MIP duration rules, how long is annual MIP generally required at this initial LTV?

A note describes its caps as 2/2/6 on a 5/1 ARM starting at 4.75%. What do the three numbers in this ARM cap notation represent?

A borrower asks which part of her adjustable rate the lender can change during the loan: the index at 4.1% or the margin at 2.75. Under a note specifying a fixed margin and an externally published index, may the lender unilaterally reset either component at each adjustment?

A borrower has gross monthly income of $6,000. The proposed housing payment plus all counted monthly debts total $2,100. What is the back-end DTI?

A processor calculates the adjusted rate by adding the margin to the index and stops there, ignoring the lifetime cap of 5% over the start rate. The sum comes to 6.5 points over the start rate. What is wrong?

A survey shows the neighbor's garage crossing the boundary by 2 feet, and a driveway easement in favor of the property behind. How should the garage intrusion and the driveway right be classified?

A contract is written at $455,000 and the appraisal comes in at $430,000. The borrower planned to put 20% down on the contract price. If the lender requires 80% LTV based on the lower appraisal and the price is unchanged, how does the appraisal affect the loan basis and cash needed?

In a training scenario, an applicant is considering a USDA Section 502 guaranteed loan. What action best follows the rule?

A buyer at $500,000 takes a first of $400,000, a second of $50,000, and puts $50,000 down to avoid mortgage insurance. What is the name of this first-mortgage, second-mortgage, and downpayment structure?

A couple aged 64 and 59 own their home outright and ask about a HECM. They intend to keep living there. If both spouses wish to be HECM borrowers rather than use an eligible non-borrowing-spouse arrangement, do they both satisfy the minimum age requirement?

Gross monthly qualifying income is $7,500, proposed monthly PITI is $2,025, and all other counted monthly debt is $600. There are no additional housing charges. What are the housing-expense and total debt-to-income ratios?

A Fannie Mae loan requires six months of reserves, with PITIA of $2,340. After closing funds are accounted for, the borrower has $21,500 of verified eligible publicly traded stock, net of any margin debt. How is this asset treated for reserves?

A 5/1 ARM starts at 4.25% with caps of 2/2/6. At the first adjustment the index plus margin computes to 8.10%. What interest rate applies at the first adjustment after the initial cap is applied?

Paying 1.5 points on a $300,000 loan costs $4,500 and cuts the payment by $90 a month. The borrower expects to sell in about 3 years. What is the simple break-even period, and is it reached within the expected three-year holding period?

A 30-year FHA loan closes at 96.5% loan-to-value and the borrower asks how long the annual premium will be billed. For an FHA case number assigned under the post-June-2013 duration rules, how long is annual MIP required at this original LTV?

A veteran used $92,000 of entitlement on a home he still owns and rents out. He now wants a VA loan on a new principal residence. Assuming he otherwise qualifies for the new VA loan, how may remaining entitlement be used while the earlier loan remains outstanding?

A conventional borrower with 22% equity asks to waive escrows on a loan that is not higher-priced. The lender charges 0.25 points for the waiver. Assuming no other federal or state escrow requirement applies and the investor permits it, may the lender offer this priced escrow waiver?

A buyer wants to move a load-bearing wall and add 300 square feet to a house financed with an FHA rehabilitation loan. Which FHA 203(k) program accommodates the proposed structural work?

A borrower is offered lender-paid mortgage insurance at 6.875% or borrower-paid at 6.375% with a $148 monthly premium. What does the rate difference mean for LPMI, and can the borrower later remove that rate premium using HPA cancellation rights?

A veteran buying with nothing down receives VA compensation for a 30% service-connected disability and is quoted a funding fee of $6,880. Does receiving this service-connected disability compensation exempt the veteran from the funding fee?

A refinance closes Wednesday 15 July. Rescission runs Thursday, Friday and Saturday, and disbursement follows on Monday 20 July. If the prior lender receives payoff on 20 July, through what date must the old loan's payoff interest be addressed?

A borrower needs $812,000 in a county where the conforming limit is $766,550, and asks why the rate quoted is higher. Using the county limit stated in this hypothetical, why is the loan classified as jumbo rather than conforming?

A 71-year-old wants reverse mortgage proceeds to arrive monthly for as long as she lives in the home, with no fixed end date. Which HECM payment plan matches the borrower's request for monthly payments with no fixed ending date?

An underwriter needs the current FHA rule on how a self-employed borrower with 2 years of returns documents income on a $412,000 single-family purchase. Which publication should the underwriter consult for current FHA single-family underwriting policy?

A borrower with a 562 credit score is buying a $280,000 home and asks what FHA will require down. Under FHA's minimum-credit-score and investment rules, and assuming all other eligibility requirements are met, what minimum downpayment applies?

An FHA applicant defaulted on a federal student loan 3 years ago and the balance was never brought current. Absent an applicable exception, how does unresolved delinquent federal debt affect FHA eligibility?

A veteran using the benefit for the first time buys a $320,000 home with nothing down and is not receiving disability compensation. Assuming no funding-fee exemption applies, what fee rate and dollar amount apply to this first-use, zero-down purchase?

A veteran refinances a $240,000 VA loan into a lower rate with no cash out, using an interest rate reduction refinancing loan. Assuming the veteran is not exempt and the fee base is $240,000, what IRRRL funding fee applies?