FiCEP Housing and Mortgage Counseling 5

Question 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?

Accepted Answer

Contact the mortgage servicer to request a loss mitigation application

Answer

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

Question 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?

Accepted Answer

Periodic adjustment cap

Answer

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

Question 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?

Accepted Answer

100%

Answer

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

Question 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?

Accepted Answer

41%

Answer

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

Question 5

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

Accepted Answer

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

Answer

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

FiCEP - Financial Counseling Certification Program Practice Test

FiCEP - Financial Counseling Certification Program Practice Test

FiCEP Housing and Mortgage Counseling 5