General Mortgage Knowledge

What type of loan is a 5/1?

• Negative Amortization

• Fixed Rate

• Balloon

• ARM

Which of the following is prohibited from high cost loans?

• Adjustable Rates

• Balloon Mortgage less than 5 years

• Escrow Accounts

• Fixed Rates

What does annual analysis do?

• Prorates escrows

• Reviews taxes and insurances for the year

• Insures compliance with the Truth In Lending Act

• Rebates excess interest

Which component of an ARM payment remains constant?

• Index

• CPI

• Margin

• 4th district cost of funds

Which of the following is true of an amortized fixed-rate mortgage?

• Equal portions of each level payment are allocated to principal and interest

• Unequal, but level, payments are allocated to principal and interest

• A portion of the level payment goes to principal on an ever-increasing basis and a portion is allocated to interest on an ever-decreasing basis.

• A portion of the level payment goes to interest on an ever-increasing basis and a portion is allocated to principal on an ever-decreasing basis

A characteristic of a balloon mortgage is which of the following?

• Payments always increasing

• Balloon rider (clause) to the mortgage

• Contain negative amortization

• May not be for more than 5 years

Borrower asks for the definition of a point...

• APR adjustments

• 1% of loan amount

• Always increases lenders yield

• Lender paid compensation

What’s the report called that a loan servicer gives to the borrower that explains an increase in hazard insurance or real estate taxes?

• Anti-coercion statement

• Truth-in-lending statement

• Closing Disclosure

• Annual escrow analysis statement

When a mortgage is taken back as a part of the sales price by the seller of the property, the security instrument is known as a:

• Purchase money mortgage

• Chattel mortgage

• Term mortgage

• None of the above

FHA will not allow which of the following?

• 2 family property that is being converted into a single family home

• High rise condo

• Co-op

• Non-owner occupied single family home