CR16 - REG Z ARMs Adj Rate Mtgs Questions and Answers
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Course
ARM
Institution
ARM
CR16 - REG Z ARMs Adj Rate Mtgs Questions and Answers
B
107D4FDD971844CBA17B8BA1E5E37472
Not answered. The correct answer is B. A, C, and D are incorrect because borrowers who are risk adverse, on a fixed income, and who plan to stay in their homes longer than a few years are better candidates...
CR16 - REG Z ARMs Adj Rate Mtgs
Questions and Answers
B
107D4FDD971844CBA17B8BA1E5E37472
Not answered. The correct answer is B. A, C, and D are incorrect because borrowers
who are risk adverse, on a fixed income, and who plan to stay in their homes longer
than a few years are better candidates for a fixed rate loan. - answer 1. Adjustable
Rate Mortgages (ARMs) are not for everyone. Which consumer might be a good
candidate for a 5-year ARM?
A. Betty and Sam, who plan to be in their home for the next 30 years
B. Paul and Bob who only plan to live in their home for the next 5 years
C. Susan who is retired and is on a fixed income
D. Mark, who has a wife and a new baby and is risk-adverse
D
DAC75A96379544D99D3A4C413E91F311
Not answered. The correct answer is D. A is incorrect because the ARM disclosure
must only include rate adjustments for variable loans. B is incorrect because the
consumer may ask for the current margin and interest rate. C is incorrect because the
amount must be based on a loan of $10,000. - answer 2. Reg Z requires ARM
disclosures to include certain information. What item must be included in ARM
disclosure?
A. The rate adjustments for all fixed and variable rate loans
B. A statement that the consumer may not ask for the current margin and interest rate
C. Creditors must either disclose a historical loan example of charges from the index
used or disclose the maximum interest rate and payment amount as based on a loan of
$20,000
D. The frequency of the rate change and payment adjustments
C
1E25AE87B18841FAA48A042CACC2B007
Not answered. The correct answer is C. A, B, and D are incorrect because Reg Z
disclosure requirements state that when the application is taken by phone (or through a
third party), the required information must be mailed or delivered within three business
days. - answer 3. ARM disclosures must generally be given at application. When the
application is taken over the telephone, when is the bank required to deliver the ARM
disclosures or place them in the mail?
A. Immediately
B. By the seventh day after consummation
, C. Within three business days
D. If the bank cannot deliver the disclosures at application, there is no need to deliver
them at a later date
D
A8DB997C1A944E6696592EE746382B65
Not answered. The correct answer is D. A, B, and C are incorrect as all these are
elements of an ARM. - answer 4. An adjustable rate mortgage has the four elements.
Which option is not an element of an ARM?
A. An index
B. A margin
C. An interest rate cap structure
D. A fixed payment
C
D3B013D0613B484C8A3DE791E5A00DA4
Not answered. The correct answer is C. A and B are incorrect because these
disclosures are not required at application. D is incorrect because there is no such
booklet. - answer 5. Callie and John Dixon are applying for an ARM loan. At loan
application, the bank must provide both a loan program disclosure for each ARM in
which the consumer expresses an interest and
A. A Loan Estimate
B. A Closing Disclosure
C. The Consumer Handbook on Adjustable Rate Mortgages, (also known as the
CHARM Booklet)
D. The Handbook on Adjustable Rate Mortgages (also known as the HARM booklet)
that explains potential harm caused by getting an ARM loan
B
845EB5A6BEC3412987ECC22379EFAF90
Not answered. The correct answer is B. A, C, and D are incorrect because they are all
advantages of an adjustable rate mortgage. - answer 6. Jenny and Jeff are
interested in applying for a real estate loan. In the newspaper, your bank is advertising
adjustable rate mortgages with very attractive interest rates. You have discussed the
advantages of an ARM with them. What is a disadvantage of an ARM?
A. The initial interest rate of an ARM is lower than a fixed rate mortgage
B. The exact payment over time can fluctuate and may increase
C. Lenders typically offer initial discount rates on the interest rate index
D. If interest rates remain constant or decline during the life of the loan
D
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