NMLS General Mortgage Knowledge 3

Question 1

Absent a subordination agreement, which lien generally has priority in a foreclosure?

Accepted Answer

The lien recorded first

Answer

Priority is generally determined by recording date, so first-recorded is first in line.

Question 2

One discount point on a mortgage equals what amount?

Accepted Answer

1% of the loan amount

Answer

A discount point is prepaid interest equal to 1% of the loan amount.

Question 3

Which entity sets the annual conforming loan limits?

Accepted Answer

FHFA

Answer

The Federal Housing Finance Agency sets conforming limits for Fannie Mae and Freddie Mac.

Question 4

Private mortgage insurance on a conventional loan is generally required when the LTV exceeds what level?

Accepted Answer

80%

Answer

Lenders typically require PMI when the down payment is under 20%, meaning LTV above 80%.

Question 5

Under the Homeowners Protection Act, PMI must automatically terminate when the loan balance is scheduled to reach what percentage of the original property value?

Accepted Answer

78%

Answer

HPA requires automatic termination at 78% LTV based on the original amortization schedule, if the borrower is current.

(NMLS) National Mortgage Licensing System Practice Test

(NMLS) National Mortgage Licensing System Practice Test

NMLS General Mortgage Knowledge 3