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

A 5/1 ARM offers a fixed rate for 5 years, then adjusts annually, making it ideal for borrowers who plan to sell before the adjustment period begins.

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

RESPA required the Good Faith Estimate to be delivered within 3 business days of receiving a completed loan application.

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 piggyback loan pairs a first mortgage with a simultaneous second mortgage (commonly 80/10/10) so the borrower can avoid private mortgage insurance.

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

HOEPA was enacted to protect consumers by imposing additional disclosure requirements and restrictions on high-cost mortgage 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

HECM reverse mortgages require borrowers to be at least 62 years old and must use the home as their primary residence.

(CMC) Certified Mortgage Consultant Practice Test

(CMC) Certified Mortgage Consultant Practice Test

CMC Mortgage Products and Lending Practices 2