Prepxl Practice Test 6 Questions With Complete Solutions Rated A+

Cindy bought a home and closed on a 6.0% rate for 30 years. The loan includes a payment feature that allows Cindy to make a $1,400/month payment for the first five years, and a $1,800/month payment for the remainder of the loan. What type of loan is this? - Variable - ARM - Option ARM - Fixed rate - Answer-Fixed rate. This loan is a fixed-rate loan (at 6% for 30 years). The payment example shows an interest-only feature for the first five years and then a fully-amortized payment for the remainder of the loan. Which of the following would be considered a credit report red flag? - Names on credit report match names on application - There is a DBA or an AKA - The debts the applicant disclosed are accurately reflected on the credit report - Paystubs, W-2s, or other income docs are handwritten - Answer-There is a DBA or an AKA. The presence of a DBA (doing business as) or AKA (also known as) would be a credit report red flag. Which of the following is used as a method of identifying and holding licensees accountable, according to the S.A.F.E. Act? - Loan originator financial and ethical disclosures - Records of annual loan originator volume - Unique identifier - CSBS number - Answer-Unique identifier.The "unique identifier" is the official description of the NMLS number, which is used to track and hold accountable all licensed entities and individuals in the mortgage lending industry. A revised Loan Estimate is required when: - There is any change in circumstances - Interest rates drop - Interest rates increase - The loan applicant locks his or her interest rate - Answer-The loan applicant locks his or her interest rate. A revised Loan Estimate is required when a loan applicant locks the interest rate. Offering revised estimates for a change in circumstances is restricted to limited situations. Civil monetary penalties resulting from the failure to report data for HMDA are: - $1,000 per violation, with a maximum of $300,000 in fines annually - Calculated based on a penalty matrix, which considers good faith, previous violations, and financial resources of the entity involved - Calculated based on a percentage of total loan amounts of mortgages in violation - $11,000 per violation, but can be increased to $25,000 for willful and knowing violations - AnswerCalculated based on a penalty matrix, which considers good faith, previous violations, and financial resources of the entity involved. HMDA uses a penalty matrix to determine fines for violations. The matrix includes considerations for good faith, previous violations, and the financial resources of the entity involved. A fee that lenders may receive for selling or transferring their right to service a mortgage loan is called: - Yield spread premium- Margin - Service release premium - Finance charge - Answer-Service release premium. When a lender gives up its right to service a loan through sale or transfer of that loan, the lender may receive a service release premium in exchange for relinquishing its right. When a loan originator accepts a referral fee from a real estate agent, both are in violation of what section of RESPA? - Section 10 - Section 12 - Section 6 - Section 8 - Answer-Section 8. Section 8 of RESPA deals with the prohibition against giving or receiving anything of value pursuant to an agreement or understanding Which of the following fees must be included in the calculation of finance charges? - Appraisal fees - Seller's points - Credit reporting fees - Origination fees - Answer-Origination fees