Practice Test GeeksFiCEP - Financial Counseling Certification Program Practice Test
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Housing and Mortgage Counseling Flashcards

7 cards from real FICEP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Housing and Mortgage Counseling flashcards as text

  1. A client received a Notice of Default (NOD) 45 days ago and has not contacted their servicer. As their housing counselor, what is the most urgent action to recommend?

    Answer: Contact the mortgage servicer to request a loss mitigation application

    Contacting the servicer to request loss mitigation is critical because federal rules require servicers to evaluate borrowers before proceeding to foreclosure.

  2. Which loan feature specifically protects borrowers from payment shock by capping how much an adjustable-rate mortgage payment can increase in a single adjustment period?

    Answer: Periodic adjustment cap

    Periodic adjustment caps limit the amount an ARM's interest rate can change at each scheduled adjustment, preventing sudden large payment increases.

  3. A first-time homebuyer client qualifies for a USDA Rural Development guaranteed loan. What is the maximum allowable LTV ratio for this loan type?

    Answer: 100%

    USDA guaranteed loans allow up to 100% financing, meaning eligible rural borrowers can purchase with no down payment.

  4. When assessing a client's readiness for homeownership, which debt-to-income (DTI) ratio does FHA use as a general qualifying guideline for total monthly obligations?

    Answer: 41%

    FHA generally uses a back-end DTI guideline of 41%, though compensating factors may allow approval at higher ratios.

  5. A borrower accepts a deed-in-lieu of foreclosure. What is a key advantage of this option compared to a standard foreclosure?

    Answer: It typically causes less severe damage to the borrower's credit than foreclosure

    A deed-in-lieu typically has a less severe negative impact on credit and may resolve the default faster than a lengthy foreclosure process.

  6. What does the term 'underwater mortgage' refer to in housing counseling contexts?

    Answer: A loan balance exceeding the current market value of the property

    An underwater or upside-down mortgage occurs when the outstanding loan balance is greater than the home's current market value.

  7. A client completed a short sale and asks about the tax implications of the forgiven debt. Which IRS form would the lender typically issue to report the cancelled debt amount?

    Answer: Form 1099-C

    Lenders issue IRS Form 1099-C (Cancellation of Debt) to report forgiven debt amounts, which the IRS may treat as taxable income.