CMPS CMPS Mortgage Insurance and Protection Products Questions and Answers 2

Question 1

What is the VA Funding Fee, and which group of veterans is exempt from paying it?

Accepted Answer

A one-time fee that replaces PMI on VA loans; veterans receiving VA disability compensation are exempt

Answer

The VA Funding Fee is a one-time charge that helps fund the VA loan program in lieu of PMI; veterans with a service-connected disability rating of 10% or more are fully exempt.

Question 2

What is the USDA annual guarantee fee, and how does it compare to FHA's annual MIP in terms of cancellability?

Accepted Answer

USDA's annual fee (currently 0.35%) is lower than FHA's and does cancel when LTV reaches 80%

Answer

USDA charges an annual guarantee fee (currently 0.35% of the outstanding balance) that is lower than FHA's annual MIP and may be eliminated when the loan balance reaches 80% LTV.

Question 3

Which of the following best describes 'mortgage protection insurance' (MPI) as distinct from PMI?

Accepted Answer

MPI is a voluntary life/disability insurance policy that pays off or reduces the mortgage balance if the borrower dies or becomes disabled

Answer

Mortgage protection insurance is a voluntary decreasing-term life and/or disability policy that pays the lender (not the borrower's estate) to retire the mortgage debt upon a qualifying event.

Question 4

A borrower with a conventional loan reaches 20% equity through home appreciation. Can they request PMI cancellation based on the new appraised value?

Accepted Answer

Yes — borrowers may request cancellation based on current value if the loan is at least 2 years old (80% LTV) or 5 years old (any LTV), subject to lender guidelines

Answer

Under Fannie Mae guidelines, borrowers can request PMI cancellation based on current appraised value if the loan-to-value is 75% or below (2–5 years seasoning) or 80% (5+ years seasoning), typically requiring a new appraisal.

Question 5

What is 'split-premium PMI,' and when might a CMPS advisor recommend it?

Accepted Answer

A PMI structure where part of the premium is paid upfront at closing and the remainder is paid monthly, reducing the monthly payment compared to standard BPMI

Answer

Split-premium PMI combines an upfront payment at closing with a reduced monthly premium, lowering the ongoing monthly cost while not raising the interest rate like LPMI.

(CMPS) Certified Mortgage Planning Specialist Practice Test

(CMPS) Certified Mortgage Planning Specialist Practice Test

CMPS CMPS Mortgage Insurance and Protection Products Questions and Answers 2