FiCEP Housing and Mortgage Counseling 4

Question 1

A homeowner has a loan-to-value (LTV) ratio of 85% and wants to cancel PMI. What must the LTV reach before the lender is required by law to automatically cancel PMI?

Accepted Answer

78%

Answer

Under the Homeowners Protection Act, lenders must automatically cancel PMI when the LTV reaches 78% based on original amortization.

Question 2

During a post-purchase counseling session, a client mentions they received a notice of escrow shortage. What is the most likely cause?

Accepted Answer

Property taxes or homeowners insurance premiums increased

Answer

Escrow shortages typically occur when property taxes or insurance premiums rise above what was originally estimated and collected.

Question 3

A borrower is comparing a 15-year fixed mortgage and a 30-year fixed mortgage for the same loan amount. Which statement is most accurate?

Accepted Answer

The 15-year loan will result in significantly less total interest paid

Answer

A 15-year mortgage accrues interest over half the time, resulting in dramatically lower total interest cost despite a higher monthly payment.

Question 4

What is the purpose of the HUD-approved housing counseling agency requirement for certain FHA borrowers?

Accepted Answer

To ensure borrowers understand loan terms, rights, and responsibilities

Answer

HUD-approved counselors educate borrowers about mortgage obligations, homeownership responsibilities, and available assistance programs.

Question 5

A client is delinquent on their mortgage and asks about a forbearance agreement. Which best describes what forbearance provides?

Accepted Answer

A temporary suspension or reduction of mortgage payments

Answer

Forbearance is a temporary agreement allowing the borrower to pause or reduce payments, with the deferred amount typically repaid later.

FiCEP - Financial Counseling Certification Program Practice Test

FiCEP - Financial Counseling Certification Program Practice Test

FiCEP Housing and Mortgage Counseling 4