CMC Mortgage Products and Lending Practices 2

Question 1

A borrower wants to minimize monthly payments for the first 5 years and then plans to sell before the rate adjusts. Which loan product best fits this strategy?

Accepted Answer

5/1 ARM

Answer

30-year fixed-rate mortgage

Answer

FHA 203(k) loan

Answer

USDA Rural Development loan

Question 2

Under RESPA, the Good Faith Estimate (now replaced by the Loan Estimate) was required to be delivered to the borrower within how many business days of receiving the loan application?

Accepted Answer

3 business days

Answer

1 business day

Answer

5 business days

Answer

7 business days

Question 3

Which of the following best describes a 'piggyback loan' structure?

Accepted Answer

A second mortgage used simultaneously with a first to avoid PMI

Answer

A loan that combines a fixed and ARM component in a single note

Answer

A construction loan that converts to permanent financing

Answer

A bridge loan secured by two properties at once

Question 4

What is the primary purpose of the Home Ownership and Equity Protection Act (HOEPA)?

Accepted Answer

To protect consumers from predatory high-cost mortgage lending

Answer

To regulate conforming loan limits set by the FHFA

Answer

To establish maximum LTV ratios for conventional loans

Answer

To mandate escrow accounts on all federally backed loans

Question 5

A reverse mortgage borrower must meet which of the following eligibility requirements?

Accepted Answer

Must be at least 62 years old and the home must be a primary residence

Answer

Must be at least 55 years old and have a credit score above 640

Answer

Must be retired and have no existing mortgage on the property

Answer

Must have at least 50% equity and an income below the area median

Question 6

Which loan feature allows the lender to demand full repayment of a mortgage before the scheduled maturity date under specific circumstances?

Accepted Answer

Acceleration clause

Answer

Prepayment penalty clause

Answer

Due-on-sale clause

Answer

Balloon payment provision

Question 7

A non-QM loan differs from a qualified mortgage primarily because it:

Accepted Answer

Does not meet CFPB's ability-to-repay safe harbor standards

Answer

Carries a higher LTV limit and lower FICO requirement

Answer

Is only available to first-time homebuyers

Answer

Cannot be securitized in the secondary market