land that does not have basic services like electricity, sewers, road access, phone lines, or water service

Bridge or swing loans

A short-term loan used to buy a house then pay off the loan with the proceeds from the sale of another home

When a lender agrees to modify the terms of an existing mortgage in order to lower the payment

when a lender extends credit to a homeowner based on the home's equity, which is the value of the home minus the home's outstanding loans

A mortgage on a residential property whose terms and remaining balance are transferred from the seller to the new buyer when a home is sold

When an elderly person uses the equity in his or her home to secure a monthly stipend from the lender

True or false: The lender is not required to inform the borrower that he or she has certain rights during the foreclosure process.

False. The lender is required to inform the borrower that he or she has certain rights during the foreclosure process.

Foreclosure is the lender's remedy for recouping losses when a borrower defaults on a mortgage. When a borrower cannot pay, the lender takes the home and sells it, keeping the proceeds from the sale of the home. Lenders can begin the foreclosure process after a borrower falls behind on payments by 120 days.

Why do lenders gather information about an applicant's race and personal characteristics?

To show they are complying with anti-discrimination laws

When can a lender consider things like marital status, age, and permanent residency?

Only in some circumstances, and only when these factors have a direct bearing on a borrower's ability to repay or be eligible for certain loans

Why can someone's immigration or permanent residency status be considered in a credit application?

Because that person may be deemed a risk to leave the country before repaying a loan, that person can be denied credit.

Can age be a consideration when some mortgages, like reverse mortgages, can be extended to persons who are 62 or older?

Yes, age can be a consideration, especially in this scenario.

What are some acceptable reasons to deny credit?

If the borrower's credit report shows excessive late payments, high current credit obligations, little to no credit history, or has insufficient income or has not been employed long enough to demonstrate that he or she is an acceptable risk to be inadequate in terms of condition.

What must be provided to the borrower if a lender denies credit?

When a lender denies credit, a written response must be provided to the borrower explaining the specific reasons for the denial.

What is a prohibited factor?

A prohibited factor is any characteristic that lenders are legally barred from using when evaluating a loan application or making lending decisions. Prohibited factors include skin color, race, sex, religion, etc. These factors are protected under the Consumer Credit Protection Act.

What are three acceptable terms to describe marital status?

Married, unmarried, and separated

When can the lender ask about a spouse?

A lender can ask about a spouse only if the spouse is involved in the application (a joint application) or involved somehow in the transaction.

True or false: A lender can ask an applicant if any portion of his or her income is derived from alimony, child support, or separate maintenance.

False. A lender cannot ask an applicant if any portion of his or her income is derived from alimony, child support, or separate maintenance unless the lender first discloses to the applicant that he or she does not have to reveal this source of income unless he or she wants it to be considered in the application.

True or false: A lender can ask an applicant about intentions to bear children, use of birth control, capability of having children, or the rearing of children.

False. A lender cannot ask an applicant about intentions to bear children, use of birth control, capability of having children, or the rearing of children.

Define disparate treatment

Disparate treatment is when a lender treats an applicant differently based on one of the prohibited factors.

What are subprime loans?

Subprime loans refer to the creditworthiness of the borrower. Subprime borrowers usually have lower credit scores and are a great risk to default.

What is an example of disparate treatment?

An example would be offering loan choices to applicants based on one of the prohibited factors.

What is another example of disparate treatment?

A lender might also be practicing disparate treatment if it provides more information to men than women.

Mometrix Test Preparation NMLS Study Guide 2024-2025

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Other

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Vocational training

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Hard

Mr. González

FREE Resource

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55 questions

Show all answers

FLASHCARD QUESTION

Front

What does RESPA stand for?

Back

Real Estate Settlement Procedures Act

FLASHCARD QUESTION

Front

In what year was RESPA enacted by the government?

Back

1974

FLASHCARD QUESTION

Front

What was RESPA designed for?

Back

It was designed to protect consumers by making real estate transactions transparent and fair.

FLASHCARD QUESTION

Front

What does RESPA require?

Back

The law requires lenders to clearly disclose to buyers and sellers all of the costs involved in a real estate transaction.

FLASHCARD QUESTION

Front

What does RESPA also attempt to do?

Back

The law requires lenders to educate consumers about their consumer protection rights. it also gives consumers recourse in the event they believe a lender has treated them unfairly.

FLASHCARD QUESTION

Front

Mortgage broker

Back

Like a matchmaker that connects borrowers to lenders, and mortgage brokers also get paid a fee after matching borrowers with lenders.

FLASHCARD QUESTION

Front

What does RESPA prohibit?

Back

It prohibits kickbacks, unearned fees or payments, and excessive escrow requirements. It also prohibits sellers from requiring buyers to use certain settlement service providers as a stipulation to the sales agreement.

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