HUD Certification New Practice Questions
and Answers | Complete Prep Resource | A+
Pass Guaranteed
• A client would like purchase a home within one year. The client is motivated to
increase household income as a way to save for a down payment and qualify for a loan.
Which is the best solution for the client to reach this goal?
Find a second job
Borrow from retirement fund
Sell major assets
Find a temporary job through a staffing service -✓✓Find a second job
• A credit report may contain which information?
The number of accounts in collection status
A history of payments on an electric bill
Income history
Criminal record -✓✓The number of accounts in collection status
• A credit report contains inaccurate information. Which action item should the counselor
include in the Client Action Plan?
-Attach a letter to mortgage applications explaining the inaccuracies.
-Investigate the reasons why the inaccuracies occurred to determine the responsible
party.
-Include a personal consumer statement on the credit report.
-File a dispute with the appropriate credit reporting agency. -✓✓File a dispute with the
appropriate credit reporting agency.
• Six months ago a client left a job as a reporter to start a business in the retail industry.
To prepare to buy a house, the client closed credit card accounts and has been using
savings to pay down credit card debt and collections. The client has not been able to
save much for a down payment with all the debt payments but knows about an
affordable home-ownership program that only requires a 1% down payment with an
FHA loan.
What might result from the client closing the credit card accounts?
-It decreases credit utilization, causing a negative impact on the credit score.
-It increases credit utilization, causing a negative impact on the credit score.
-It increases credit utilization, causing a positive impact on the credit score.
,-It decreases credit utilization, causing a positive impact on the credit score. -✓✓It
decreases credit utilization, causing a positive impact on the credit score.
• Which action would a client take to improve a credit score?
-Request to expunge public records
-Apply for new credit cards to increase credit
-Cancel all credit cards
-Pay delinquent accounts -✓✓Pay delinquent accounts
• A client does not receive a written monthly statement from the credit card company.
Which credit law could this omission violate?
-Fair Credit Billing Act
-Fair Credit Reporting Act
-Fair Housing Act
-Fair and Accurate Credit Transactions Act -✓✓Fair Credit Billing Act
• A client shopping for a mortgage loan presents a housing counselor with an offer from
a local mortgage lender. The interest rate on the offer is 7.5% for a 30-year fixed rate
mortgage with a 20% down payment required. The counselor reviews the client file and
determines the client's credit score is 725 and the client's total debt-to-income ratio is
20%.
The client asks the housing counselor if the offer is a case of illegal predatory lending.
How should the housing counselor respond?
-"You have been a victim of predatory lending and should file a report with the
Consumer Finance Protection Bureau (CFPB)."
-"The loan seems reasonable. You might do better, but I cannot steer you to any
particular loan originator."
-"I am unable to determine whether the loan is predatory, but I suggest you shop around
with other lending sources."
-"I cannot offer legal advice, but I would not proceed with the loan." -✓✓"I am unable to
determine whether the loan is predatory, but I suggest you shop around with other
lending sources."
• Which action should a counselor recommend a client take first after discovering
identity theft?
-File for a name change.
-Apply for a new Social Security number.
-File an identity theft report.
-Purchase identity theft protection. -✓✓File an identity theft report.
, • In which situation would a client's responsibilities, recurring costs, and upfront costs be
evaluated?
-When considering closing costs
-When choosing a loan officer
-When weighing housing options
-When applying for a loan modification -✓✓When weighing housing options
• A client works 40 hours a week making $15 an hour. What is the highest monthly
mortgage the client can afford based on income if the client secures a conventional
loan?
-$728
-$806
-$936
-$1,118 -✓✓$728
• Which type of government insured loan was created for financing homes in rural
areas?
-VA
-Fannie Mae
-FHA
-USDA -✓✓USDA
• Which type of assistance administered by a public housing authority allows for location
flexibility. A client keeps having budget problems due to unexpected expenses. Which
financial tool would best assist this client to prepare for unexpected expenses and avoid
increasing credit usage?
-Emergency fund
-Line of credit
-Payday loan
-Retirement savings account -✓✓Emergency fund
• A client has a monthly household income of $2,300, monthly debt payments of $450,
and an optimal monthly housing ratio of 32%. What is the client's optimal monthly
housing payment?
-$592
-$736
-$880
-$1,186 -✓✓$736
and Answers | Complete Prep Resource | A+
Pass Guaranteed
• A client would like purchase a home within one year. The client is motivated to
increase household income as a way to save for a down payment and qualify for a loan.
Which is the best solution for the client to reach this goal?
Find a second job
Borrow from retirement fund
Sell major assets
Find a temporary job through a staffing service -✓✓Find a second job
• A credit report may contain which information?
The number of accounts in collection status
A history of payments on an electric bill
Income history
Criminal record -✓✓The number of accounts in collection status
• A credit report contains inaccurate information. Which action item should the counselor
include in the Client Action Plan?
-Attach a letter to mortgage applications explaining the inaccuracies.
-Investigate the reasons why the inaccuracies occurred to determine the responsible
party.
-Include a personal consumer statement on the credit report.
-File a dispute with the appropriate credit reporting agency. -✓✓File a dispute with the
appropriate credit reporting agency.
• Six months ago a client left a job as a reporter to start a business in the retail industry.
To prepare to buy a house, the client closed credit card accounts and has been using
savings to pay down credit card debt and collections. The client has not been able to
save much for a down payment with all the debt payments but knows about an
affordable home-ownership program that only requires a 1% down payment with an
FHA loan.
What might result from the client closing the credit card accounts?
-It decreases credit utilization, causing a negative impact on the credit score.
-It increases credit utilization, causing a negative impact on the credit score.
-It increases credit utilization, causing a positive impact on the credit score.
,-It decreases credit utilization, causing a positive impact on the credit score. -✓✓It
decreases credit utilization, causing a positive impact on the credit score.
• Which action would a client take to improve a credit score?
-Request to expunge public records
-Apply for new credit cards to increase credit
-Cancel all credit cards
-Pay delinquent accounts -✓✓Pay delinquent accounts
• A client does not receive a written monthly statement from the credit card company.
Which credit law could this omission violate?
-Fair Credit Billing Act
-Fair Credit Reporting Act
-Fair Housing Act
-Fair and Accurate Credit Transactions Act -✓✓Fair Credit Billing Act
• A client shopping for a mortgage loan presents a housing counselor with an offer from
a local mortgage lender. The interest rate on the offer is 7.5% for a 30-year fixed rate
mortgage with a 20% down payment required. The counselor reviews the client file and
determines the client's credit score is 725 and the client's total debt-to-income ratio is
20%.
The client asks the housing counselor if the offer is a case of illegal predatory lending.
How should the housing counselor respond?
-"You have been a victim of predatory lending and should file a report with the
Consumer Finance Protection Bureau (CFPB)."
-"The loan seems reasonable. You might do better, but I cannot steer you to any
particular loan originator."
-"I am unable to determine whether the loan is predatory, but I suggest you shop around
with other lending sources."
-"I cannot offer legal advice, but I would not proceed with the loan." -✓✓"I am unable to
determine whether the loan is predatory, but I suggest you shop around with other
lending sources."
• Which action should a counselor recommend a client take first after discovering
identity theft?
-File for a name change.
-Apply for a new Social Security number.
-File an identity theft report.
-Purchase identity theft protection. -✓✓File an identity theft report.
, • In which situation would a client's responsibilities, recurring costs, and upfront costs be
evaluated?
-When considering closing costs
-When choosing a loan officer
-When weighing housing options
-When applying for a loan modification -✓✓When weighing housing options
• A client works 40 hours a week making $15 an hour. What is the highest monthly
mortgage the client can afford based on income if the client secures a conventional
loan?
-$728
-$806
-$936
-$1,118 -✓✓$728
• Which type of government insured loan was created for financing homes in rural
areas?
-VA
-Fannie Mae
-FHA
-USDA -✓✓USDA
• Which type of assistance administered by a public housing authority allows for location
flexibility. A client keeps having budget problems due to unexpected expenses. Which
financial tool would best assist this client to prepare for unexpected expenses and avoid
increasing credit usage?
-Emergency fund
-Line of credit
-Payday loan
-Retirement savings account -✓✓Emergency fund
• A client has a monthly household income of $2,300, monthly debt payments of $450,
and an optimal monthly housing ratio of 32%. What is the client's optimal monthly
housing payment?
-$592
-$736
-$880
-$1,186 -✓✓$736
