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| Question | Answer |
|---|---|
| WHAT ARE THE GOVERNMENT RELATED LOANS | FHA (FEDERAL HOUSING administration) VA USDA(United States Department of agriculture) |
| WHAT DO STANDARD FHA PROGRAMS REQUIRE? (2) WHAT THE % OF THE LOAN AMOUNT? | both UFMIP +MIP UFMIP 1.75% + 0.5% or 250% for HECM ( reverse) mortgages |
| IN ORDER FOR LENDER TO START FORECLOSURE PROCESS HOW LATE DOES BRWR HAVE TO BE ON MORTGAGES | 4 MONTHS 120 DAYS |
| WHAT IS THE INTEREST RATE CALLED ON AN ARM LOAN AT CLOSING | Introductory rate start rate Initial rate |
| WHAT ARE AH-A LOANS | loans where a brwr has too much risk to meet underwriting standard for a conforming loan but not risky enough to be subprime |
| WHAT IS NOVATION | the process of releasing one borrower from a lending agreement and substituting a new brwr |
| WHAT IS GSE | Government Sponsored Enterprise |
| WHAT IS MIP WHAT KINDS ARE THERE | mortgage insurance premium -upfront mortgage insurance premium (ufmip) -monthly mip |
| WHAT IS A CONTINGENCY DATE | contractually dictates when the borrower financing must be in place -clear to close |
| WHAT ARE THE 2 FORECLOSURES? WHAT IS THE DIFFERENCE BETWEEN THE 2? | judicial foreclosure - method of foreclosure that requires court action to complete process (mrtge doc as security inst) non judicial foreclosure- form of foreclosure that only requires administrative action than court (trust deed as security instrument) |
| WHAT IS RETAIL LENDING | refers to direct lending to brwr : -mrtge brokers -mrtge bankers -commercial banks -thrifts -credit union participants |
| WHEN ARE MORTGAGE PYMNTS DUE? -GRACE PERIOD ? -REPORTED LATE? | the 1st monthly 15 day grace period 30 day late will report |
| WHAT ARE THE DIFFERENCES IN USDA LOANS | USDA GUARANTEED: made by private institutions and are guaranteed against loss after foreclosing proceed, low income, 1-4 unit owner occupied, upfrnt fee 2.75%, annual fee 0.5% (paid monthly) USDA direct - made directly frm USDA low to very low incme |
| WHAT IS A FORECLOSURE | A proceeding to extinguish all rights, title & interest of the owner of a property in order to sell the property and satisfy a lien against it |
| WHAT ARE THESE LOANS EX OF INCM WASNT VERIFIED BY UW NO INCOME DISCLOSED ON LOAN APP MORE THAN CREDIT SCORE WAS USED TO QUALIFY BUYER | ALT-A loans |
| WHAT IS REDEMPTION PERIOD | brwr may payoff loan in full in order to avoid a foreclosure sale of property |
| WHAT IS A TEASER RATE | when introductory rate is lower than fully indexed rate at time of closing |
| WHAT IS THE PURPOSE OF AN APPRAISAL | to make sure the property has sufficient value to support the mortgage debt |
| WHAT IS A RATE FLOOR | the lowest the interest rate may adjust on a ARM loan |
| WHAT IS CAPITAL | a brwr ability to make a down pymnt pay for closing costs and fund any escrows or reserves required at closing |
| WHAT IS A RATE LOCK FEE | fee charged to lock interest rate in order to dissuade brwr from switching to a different lender if interest decrease due to market |
| WHAT DOES IT MEAN TO ESCROW | to pay property taxes/ or insurance with the loan |
| USDA LOANS AKA? WHAT ARE THE TYPES OF USDA LOANS | United States Department of Agricultural - rural development loans USDA guaranteed loans USDA direct loans |
| WHAT IS SERVICE RELEASE PREMIUM | (SRP)- paid by investor to banker ONLY investor is purchasing right to service (collect pymnts on) the loan after closing amount of compensation depends on value of rights |
| WHAT IS A SUBPRIME LOAN HOW IS THE LENDER COMPENSATED | a loan that has a combination of credit and documentation issues which makes them too high risk to be sold FNMA or FHMLC to compensate they raise interest rate |
| WHAT ARE THE REQUIREMNTS FOR A VETERAN TO BECOME ELIGIBLE FOR BENEFITS PEACETIME WAR TIME | both active and peacetime veterans must serve a 2 year term W- require min 90 days active duty P- require min 181 days of active duty |
| WHAT IS YSP | Yield Spread Premium an amount paid by a creditor to a mortgage broker at closing to compensate the broker for making a loan at interest rate higher than investor would have accepted (banned) |
| WHAT IS A STATUTORY RIGHT OF REDEMPTION | right of redemption that exists after a judicial sale has occurred (must vacate property) |
| HOW WOULD YOU PRIORITIZE LOANS | by date they are recorded w/ county clerk oldest is 1st |
| WHAT IS HEDGING | the attempt to minimize interest-rate risk by purchasing treasury security or MBS to offset large movement in rate market |
| WHY WOULD THE INTEREST RATE BE DIFFERENT FROM THE FULLY INDEXED RATE | B/C the rate cap is at floor or ceiling |
| WHAT IS A REAL ESTATE CONTRACT | AKA Purchase and Sell agreement a written contract between buyer & seller of real property setting forth the price & all terms of the sale |
| IF NO CLEAR TO CLOSE BY CLOSE DATE, WHAT NEEDS TO HAPPEN TO AVOID PUTTING BUYERS PURCHASE OR EARNEST MONEY IN JEOPARDY | a mutually agreed upon extension in writing by applicant, real estate agent/ or attorney involved |
| WHAT IS LOAN FLIPPING | inducing a brwr to repeatedly refi in order to change high points & fees |
| WHAT IS A CONVENTIONAL LOAN WHAT IS A CONFORMING LOAN WHAT IS A NON-CONFORMING LOAN | cv-any loan that is not insured or guranteed by the federal government cf-meets the guidelines to be sold to fnma or fhlmc ncf- doesn't meet the guidelines to be sold to " " |
| WHAT ARE THE 3 TYPES OF RATE CAPS describe each | int cap:only on 1st rate adj, indicates # of % points a rate may ^ over start rate periodic cap: apply to all adj periods & indicate # of % pts rate may ^/ decrease life cap: set a maximum # of % points that a rate can ^ over start rate 4 life of loan |
| WHAT IS LENDER-PAID COMPENSATION | replaced YSP compensation paid by a lender to the broker broker makes same compensation (% of a loan amnt) |
| WHAT IS A FIXED-RATE MORTGAGE (FRM) | its a type of loan in which interest rate & pymnts (principle +intrest) remain the same for the life of the loan |
| WHEN DO CONSTRUCTION LOANS RELEASE FUNDING | when it receives evidence of actual completion of construction |
| WHAT IS A FLOATING RATE | interest rate that has not been locked by agreement between applicant and lender if interest decrease good for borrower if interest ^ bad for brwr |
| WHAT ARE THE TYPES OF RISKS EVER LOAN CARRIES (4) | credit risk- can brw pay loan according collateral "- does mrtg property offer sufficient value in event brw defaults compliance "- has loan been originated in accordance w/all fed + state mortg laws interest rate "- has loan been priced properly |
| WHAT IS THE SECONDARY MARKET WHAT ARE THE BENEFITS | secondary market is where lenders and investors buy and sell existing mortgages or mortgage-backed securities aka "resale market place" of loans |
| WHAT IS A SUBORDINATE LIEN | any mortgage or other lien that has priority lower than the first mortgage |
| WHAT IS LESA | Life Expectancy Set-aside an account, similar to an escrow act that must be created if brwr w/ reverse mortgage cant prove ability to pay future property taxes + insurance premiums |
| WHAT IS A FULLY AMORTIZING LOAN | a loan is considered fully amortizing when reg monthly pymnts result in principal balance being extinguished at end of loan term (most fixed rate loans) |
| WHAT IS POSITIVE AMORTIZATION | occurs when a portion of each pymnt is applied to principle balance decrease 1st pymnt All Interest until last pymnt All Principle |
| WHAT IS A CREDIT UNION | a financial inst operating somewhat different than other thrift inst returns earnings to members |
| WHAT IS NEGATIVE AMORTIZATION | occurs when INTEREST pymnt due doesn't cover all INTEREST accrued for the period causing loan PRINCIPLE to INCREASE |
| WHAT DOES A MORTGAGE BANKER DO | originates, funds, sells loans secured by mortg on real property acts as intermediaries between investors + brwr (can service loan too) (fund using warehouse LOC) |
| WHAT ARE FHA LOANS (5) | FHA loans: -are government insured + issued by HUD approved primary lenders -1-4 unit residential properties -required at least 3.5% down payment -require payment of mortgage insurance premiums -occupy in 60 days |
| WHAT IS ARM describe it | Adjustable RATe Mortgage interest rate changes over life of loan determined by specific index + pre-deterrmined margin |
| WHAT IS THE PURPOSE FOR GINNE MAE | issues gurantees on band pools of gov backed (FHA,VA,USDA) loans ensure investors who purchase bonds receive interest payment even if brwr defaults |
| WHAT DOES IT MEAN IF LOAN IS ASSUMABLE | a loan is assumable if a new brwr can take over the payments of an existing brwr |
| WHAT ARE RESERVES | liquid assets left over after closing to pay certain # of mortgage payments ex: common for lenders to require 2 mnths of mortgage payment in reserve |
| ON A HECM HOW IS AMOUNT APPLICANT MAY BRWR DETERMINED ( 3 ) | age of young brwr (62 or older) value of the property expected interest rate on the loan |
| WHAT IS A HELOC Home Equity Line Of Credit | revolving mortgage loan that allows the brwr to take advances at his/her discretion up to approved limit represented by % of brwr equity the property |
| AT WHAT POINT IS A REVERSE MORTGAGE DUE IN FULL | when the last remaining brwr dies moves into nursing home for 12+ mnths or property is sold |
| WHAT IS A MORTGAGE BROKER | its a firm that for a commission matches brwrs + lenders prohibit by state law to engage in any loan ownership, sale, or servicing |
| WHO OPERATES IN SECONDARY MARKET ( 3 ) WHICH OF THEM IS THE NATION'S LARGEST MORTGAGE INVESTORS + 2nd? | FNMA < largest FHLMC< 2nd largest Ginnie Mae (GNMA) THE FEDERAL HOME LOAN BANK SYSTEM PRIVATE INVESTORS |
| WHAT IS SUBORDINATE FINANCING | loans secured by subordinate liens |
| WHAT IS AN EQUITABLE RIGHT OF REDEMPTION | redemption period that expires on or before time of judicial sale of property |
| WHAT IS THE PROCESS OF SECURITIZATION | the process in which FNMA "pools" together ind loans and converts them into investible assets for public mortgage bonds aka mortgage banked securities |
| WHAT IS THE MOST COMMON FORM OF SUBORDINATE FINANCING | HELOC (Home Equity Line of Credit) |
| WHAT IS HECM | Home-equity conversion mortgage (FHA reverse mortg program) most common |
| HOW MUCH CAN A BRWR TAKE FROM PROCEEDS W/A HECM | 60% IN 1ST YEAR to reduce poor spending choices |
| WHAT IS AN INTEREST ONLY-LOAN | a fixed rate mortgage that allows the brwr to pay only interest due on the mortgage for a period of yrs after which loan becomes fully amortizing |
| WHAT ARE VA LOANS VA entitlement | government-guaranteed loans to owner occupant veterans by private lenders (banks, thrifts, mortgage comp) portion of a VA loan guaranteed by government |
| WHAT IS CHARACTER | refers to brwrs willingness to repay debt distinguished from brwr ability to repay |
| WHAT IS A REVERSE MORTGAGE | lender make periodic payments to brwr from equity of home, typically to provide incme to elderly brwrs interest does accuse |
| WHAT IS A BALLOON MORTGAGE | is a type of fixed rate w/ mnthly pymnts based on 30 yr amortizatn schedule but allws brwr to make lower mnthly pymnt shorter time frame thn lrg pymnt of full principal blnc + interest at maturity date aka partially amortizing ex: 360/180> pay 15 yr |
| WHAT IS AN ADJUSTMENT PERIOD | time in which a new interest rate will be in effect on ARMS loan |
| WHAT IS A CONSTRUCTION LOAN | is a loan to facilitate new construction of improvements on a existing property typically 6-9 months |
| WHAT DOES ADDING INDEX TO THE MARGIN HELP DO | helps lender calculate fully indexed rate (typically charged at each adjustment period) |
| WHAT IS THE PURPOSE OF FEDERAL HOME LOAN BANK (FHLB) | to spur lending in local communities through their member banks |
| WHO REGULATES THRIFTS | office of the comptroller of currency |
| WHAT IS A BRIDGE LOAN | used when a buyer wnts to finalize purchase of a new hme before current hme is sold short term cash-out loan made on equity in applicant current property paid back thru sale of current property or if keeping home thru subsequent Mortg loan |
| WHAT IS A COMMERCIAL BANK | a financial institution organized to accumulate funds primarily thru time & demand deposits & to make funds available to finance the nations commerce & industry |
| WHAT ARE EXTENUATING CIRCUMSTANCES | events beyond a persons control that may have a temp negative impact on credit history, maybe able to be accommodated in UW ex: death of family , loss of job |
| WHAT IS A RATE CAP | a limitation on the amount an interest rate can increase or decrease either at the adjustment date or over life of loan |
| WHAT IS AN INDEX | economic measurement used to make periodic interest adjustments for ARM |
| WHAT IS A PARTIALLY AMORITIZING LOAN | a loan where portion of principal is repayed w/ reg mnthly pymnts but balance is not extinguished end of the loan which causes remaining balance ex: balloon loans |
| WHAT IS A RATE LOCK | an agreement between brwr + lender for a specific period of time in which lender will hold interest rate, loan fee, & discount points for brwr |
| WHAT DOES AN APPRAISAL PROVIDE | description of all property characteristics ex: # of bdrms, bathrooms, condition of property square ft, zoning , value |
| WHAT IS THE FORMULA FOR INTEREST ONLY PYMNTS | LOAN AMOUNT x INTEREST RATE /12 |
| WHAT IS COLLATERAL | refers to the property being mortgaged as security for the loan Value of the property |
| WHAT IS FHA MAXIMUM LTV ON -PURCHASE TRANSACTIONS + -RATE/TERM REFINANCES -CASHOUT REFINANCES | -96.5% (3.5% downpayment) -97.75 % -85% |
| WHAT ARE THE 5 C'S OF UW | -capacity -capital -credit -collateral -character |
| WHAT IS A MARGIN MEASURED IN WHAT DOES EACH EQUAL | basis points 1/100 or 1% ex : 350 basis points = 3.5% |
| WHAT ARE THE QUALIFYING RATIOS FOR FHA,VA,USDA Loans (conforming) BOTH HOUSING AND TOTAL DEBT TO INCOME (DTI) | Housing / total DTI FHA 31%/43% VA na/41% USDA 29%/41% Conforming 28%/36% (FNMA FHLMC) |
| HOW ARE RATE CAPS EXPRESSED | EX: caps 5/2/5 5% adj @ 1st adj period 2% adj every period after 5% adj life of loan total (if int + periodic cap same 2/2/5 >2/5) |
| WHAT ARE MAXIMUM LTV FOR FNMA AND FREDDIE IF LOW-MODERATE INCM | 5% down payment (95% LTV) low to moderate incme 3% down payment (97% LTV) |
| HOW ARE UFMIP and MONTHLY MIP CALCULATED | loan amount X factor (collected at closing) Principle amt x factor for PMI/12 |
| WHAT IS CAPACITY | the brwr's ability to repay the loan …based on sufficient income determined by calculating & evaluating DTI ratio |
| HOW DO YOU QUALIFY FOR A REVERSE MORTGAGE | all individuals on title must be 62yrs or older must demonstrate ability to make property tax & homeowners insurance pymnts |
| WHAT IS THE LTV RATIO | loan amount / purchase price or appraised value (lesser of the two) = LTV |
| WHAT IS A THRIFT | aka (savings +loan ) a mutual or stock association chartered & regulated by office of comptroller deposits usually invested in residential mortgage loans |
| WHAT IS A WHOLE SALE LENDER | purchase + sell loans that have been originated by 3 rd party ex: mortgage bankers or brokers aka servicer |
| WHATS THE PURPOSE FOR FHA MORTGAGE INSURANCE | to protect the lender against default by brwr for life of the loan |
| WHAT ARE LOANS AMOUNTS HIGHER THAN FNMA + FREDDIE LIMITS CALLED WHATS THE LIMIT | jumbo loans 417,000 except high cost then 625,500 |
Created by:
cortnick1
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