Mortgage Federal Mortgage-Related Laws 4

Question 1

Under HOEPA, a mortgage is classified as a 'high-cost mortgage' if the APR exceeds the Average Prime Offer Rate (APOR) by more than how many percentage points for a first-lien loan?

Accepted Answer

6.5 percentage points

Answer

1.5 percentage points

Answer

3.5 percentage points

Answer

8 percentage points

Question 2

The Dodd-Frank Act's Ability-to-Repay (ATR) rule requires lenders to make a reasonable, good-faith determination that borrowers can repay their loans based on how many underwriting factors?

Accepted Answer

8 factors

Answer

4 factors

Answer

6 factors

Answer

12 factors

Question 3

A Qualified Mortgage (QM) under Dodd-Frank generally prohibits a debt-to-income (DTI) ratio exceeding what threshold (under the General QM standard)?

Accepted Answer

43%

Answer

36%

Answer

41%

Answer

50%

Question 4

Which feature is expressly prohibited in a Qualified Mortgage under the Dodd-Frank ATR/QM rule?

Accepted Answer

Balloon payment (for most QMs)

Answer

Fixed interest rate

Answer

Private mortgage insurance (PMI)

Answer

Escrow account for taxes

Question 5

Under the Homeowners Protection Act (PMI Cancellation Act), a borrower may request cancellation of PMI once the loan-to-value ratio reaches:

Accepted Answer

80%

Answer

90%

Answer

85%

Answer

75%

Question 6

Under the Homeowners Protection Act, lenders must automatically terminate PMI when the LTV ratio reaches what level, based on original amortization schedule?

Accepted Answer

78%

Answer

80%

Answer

75%

Answer

70%

Question 7

HOEPA's high-cost mortgage provisions apply to which type of transaction?

Accepted Answer

Refinances and home equity loans, not purchase money mortgages

Answer

Purchase money mortgages for primary residences only

Answer

All residential mortgage transactions including purchases and refinances

Answer

Only subordinate-lien loans and HELOCs