CMC Mortgage Products and Lending Practices 3

Question 1

Under the Equal Credit Opportunity Act (ECOA), a lender must notify an applicant of an adverse action within how many days of receiving a completed application?

Accepted Answer

30 days

Answer

ECOA requires creditors to notify applicants of adverse action within 30 days of receiving a completed credit application.

Question 2

A borrower has a conventional loan with an LTV of 78%. Under the Homeowners Protection Act, what should automatically occur?

Accepted Answer

The lender must automatically cancel PMI

Answer

The Homeowners Protection Act mandates automatic PMI cancellation when the loan balance reaches 78% of the original purchase price, provided the borrower is current on payments.

Question 3

Which type of mortgage product is specifically designed to finance both the purchase price of a home and the cost of renovations in a single loan?

Accepted Answer

FHA 203(k) Rehabilitation Loan

Answer

The FHA 203(k) rehabilitation loan allows borrowers to finance both the acquisition and renovation costs of a property through one mortgage.

Question 4

What is the key distinguishing characteristic of a 'stated income' loan compared to a fully documented loan?

Accepted Answer

The lender accepts borrower's claimed income without third-party verification

Answer

A stated income loan relies on the borrower's self-reported income without requiring W-2s, tax returns, or employer verification.

Question 5

A lender charges 2 discount points on a $300,000 mortgage. How much will the borrower pay at closing for these points?

Accepted Answer

$6,000

Answer

Each discount point equals 1% of the loan amount, so 2 points on a $300,000 loan costs $6,000 at closing.

(CMC) Certified Mortgage Consultant Practice Test

(CMC) Certified Mortgage Consultant Practice Test

CMC Mortgage Products and Lending Practices 3