HOEPA loans also are referred to as ______ after the section of the law that addresses them.
Interest-free mortgages
Private mortgages
Section 32 mortgages
Specialty mortgages
Most predatory lending occurs in the ________.
Commercial real estate market
Federal housing market
Prime lending market
Subprime lending market
Making the borrower believe that credit insurance must be purchased and financed into the loan in order to qualify is ________.
A disclosure method
A standard operating procedure
Packing
Salesmanship
Which of the following is NOT a trait of a quality lender?
Educates clients on the process
Has a consistent processing speed
Likes yield spread premiums
Patiently answers questions
A licensee is developing an ad for three properties he has listed in an upscale community. He wants to keep it short and simple. Which of these would NOT trigger full disclosure under TILA?
10% down payment
30-year fixed rate with no points
A monthly payment of $900
Get a low 4.925% APR
Which of the following is a characteristic of predatory lending?
Disclosing fees
Disclosing the true nature of the loan obligation
Linking interest rates charged to consumer creditworthiness
Making loans the consumer can’t afford
Nate is a mortgage loan originator. When working with a borrower who’s applying for a variable rate mortgage, Nate must disclose the maximum rate the borrower could pay on the mortgage and ______.
Advise the borrower that other lenders may offer lower interest rates and fees
Caution the borrower that payments will vary based on interest rate changes
Specify the exact interest rate the borrower will pay on the mortgage in the final year of the loan
Specify the exact interest rate the borrower will pay on the mortgage in year 10 of the loan
Colby qualified for a prime a loan, but her lender encouraged her to get a subprime loan instead. This is considered loan ________.
Flipping
Helping
Steering
Targeting
The primary component you look for when building a short list of qualified lenders is ________.
High prices
Inconsistency
Prestigious degree
Real-world experience
Which practice involves talking the consumer into refinancing over and over so a lender can charge fees?
Loan flipping
Poison lending
Premeditated lending
Turnover lending
Which of the following is a tactic used by a predatory lender?
Charging minorities lower interest rates
Encouraging debt
Refusing to loan to minorities
Selling mortgages on the secondary market
Carla is a state-licensed mortgage loan originator who has registered with the Nationwide Mortgage Licensing System. Additionally, she must fulfill _________ requirements.
Ethics and leadership
Experience
Income
Pre-licensure and continuing education
________ can drain the equity out of a home.
Flipping
Staging
Steering
Targeting
Pat is a successful mortgage loan originator who invests significant time in researching and learning all of the rules that affect the lending industry. For example, he knows that under Dodd-Frank lenders can ______.
Apply lender-established underwriting standards for residential loans
Charge higher points and fees to minorities
Face penalties for irresponsible lending
Vary a mortgage loan originator’s compensation significantly based on the terms of the loan
TILA is aimed at promoting the ________ of consumer credit by requiring a disclosure statement about the loan term and cost.
Decreased use
Increased use
Informed use
Sustained use
Shanice is a mortgage loan originator licensed in three states. Under the SAFE Act, Shanice needs to submit her ______ for authorization with the Nationwide Mortgage Licensing System.
Birth certificate
College diploma
Credit report
Tax filings
For loans covered under TILA, borrowers have a _____________, which provides borrowers with three days to reconsider their decision and back out without losing any money.
Right of redress
Right of refusal
Right of rescission
Right of return
Nick is approached by a lender who offers to buy his home at a discount, secure a better loan, and then sell the home back to Nick. This is considered ________.
Equity stripping
Fair financing
Standard practice
Swapping loans
The Dodd-Frank Act created the ______, an agency that carries out federal financial laws.
CFPB
FHA
MLS
RESPA
HOEPA covers ______.
Construction loans
Mortgages secured by vacation or second homes
Refinances
Reverse mortgages
Which of the following is NOT a characteristic to look for when developing your short list of lenders?
Competitive pricing
Excessive fees
Experience
Reputation
The ______ aims to protect consumers against mortgage fraud and predatory lending.
FHA
MREC
NAR
NMLS
Mindy is a mortgage loan originator who is licensed in three states. Under the SAFE Act, Mindy needs to submit her _________ for authorization with the Nationwide Mortgage Licensing System.
Birth certificate
College diploma
Credit report
Tax filings
On the federal level, the ________ requires lenders to disclose the annual percentage rate and loan terms.
Fair Housing Act
Home Affordable Modification Program
Home Ownership and Equity Protection Act
Truth in Lending Act
All of the following are provisions of the Dodd-Frank Act, EXCEPT ______.
Compelling lenders to disclose the maximum rate a consumer could pay on a variable rate mortgage
Eliminating national underwriting standards for residential loans
Establishing penalties for irresponsible lending
Expanding protections available under federal rules on high-cost loans
To safeguard consumers, what does the Consumer Credit Protection Act, which includes the Truth in Lending Act, require of lenders?
To fully disclose the terms and conditions in any offers of credit
To maintain documentation of their commitment to honesty
To provide consumers with HUD-approved education regarding the use of credit
To work with consumers to identify options that would not require the use of credit
Determine which of the following statements regarding HOEPA loans is true.
HOEPA doesn’t include any disclosure requirements.
HOEPA is designed to protect lenders from borrowers with poor credit histories.
If a loan meets the HOEPA criteria, the lender must give the borrower several disclosures at least three business days before closing on the loan.
Mortgages secured by a vacation home are subject to HOEPA coverage.
The Truth in Lending Act requires lenders to make certain ______ to consumers.
Concessions
Disclosures
Loans
Rates available
Which of the following is most susceptible to a predatory lender?
A borrower with poor credit
A family
A minority
An investor
Because Shelby has a high prepayment penalty on her high-interest loan, she is ________.
Able to pay off the loan early without penalty
Able to refinance whenever she wants without incurring any penalties
Eligible for additional tax deductions
Unable to refinance her high-interest subprime loan without paying a stiff penalty
Ariel can’t wait to find her first home. When it comes to financing, she should start looking for a lender ________.
After looking at a few dozen homes
At the beginning of the process
At the closing
When she makes an offer
A good loan officer should do all of the following except for which one?
Be available to answer questions.
Educate clients.
Encourage clients to sign quickly.
Put clients at ease.
Caressa is a state-licensed mortgage loan originator who’s registered with the Nationwide Mortgage Licensing System. Additionally, she must fulfill ______ requirements.
Experience
Income
Pre-licensure and continuing education
Sales volume
In order to protect yourself and your clients from predatory lenders, you’ll want to ________.
Encourage clients toward the subprime lending market
Give financial advice when asked to do so
Give legal advice when asked to do so
Have a short list of quality lenders you can recommend
Which of the following actions is the CFPB empowered to take?
Creating laws that protect consumers
Levying financial penalties against firms that violate consumer protection laws
Pressing criminal charges against violators of financial laws
Reimbursing consumers for financial losses