NMLS EXAM
Primary Mortgage Market - ✔✔Where credit institutions originate loans
C. The maximum the rate can increase over the life of the loan - ✔✔When an
ARM has rate caps of 5/2/6, the 6 refers to what?
A. The maximum rate increase at the initial adjustment
B. The start rate for the loan
C. The maximum the rate can increase over the life of the loan
D. The rate maximum the rate can decrease over the life of the loan
B. The borrower qualified at the buydown rate - ✔✔When utilizing a temporary
buydown to lower the interest rate on a FHA loan, which of the following are
correct
A. The borrower qualified at the note rate
B. The borrower qualified at the buydown rate
C. The rate cannot be more than 2% below the note rate
D. Seller or builder can pay the discount points to buydown the rate
A. Age - ✔✔All of the following are violations of the Fair Housing Act EXCEPT
A. Age
B. National Origin
,C. Disability
D.Religion
Encrumbrance - ✔✔Claim against property held by one who is not the legal
owner
Trigger Term - ✔✔Advertised term that requires additional disclosures
Advertising Disclosure - ✔✔An advertisement must be presented "clearly and
conspicuously" to keep from being deceptive, unfair, or otherwise violate a
Commission rule
Waving Right of Rescission - ✔✔Extenuating circumstances such as "bona fide
personal financial emergency
Right of Rescission - ✔✔Right that borrowers have to cancel a loan or line of
credit with a lender within three days of closing
Business Day - ✔✔When creditors office is open to the public, a calendar working
day except Sunday or a federal holiday
Application - ✔✔Financial information used for purposes of obtaining an
extension of credit
Disclosure - ✔✔The act of making new information known
,FTC
Federal Trade Commission - ✔✔Mission is to promote consumer protection and
eliminate and prevent anticompetitive business practices
CFPB
Consumer Financial Protection Bureau - ✔✔Regulatory agency charged with
overseeing financial products and services offered to consumers
TILA
Truth in Lending Act - ✔✔Enacted 1968 promotes the informed use of consumer
credit by requiring disclosures about terms and costs and standardizes the
manner in which costs with borrowing are calculated and disclosed
Per Diem Interest - ✔✔Interest charged on a loan for one or more days
Annual Interest Rate Formula - ✔✔Principal (X) Interest Rate = Annual Interest
Rate
Interest Only Mortgage - ✔✔Mortgage where the mortgagor is only required to
pay off the interest that arises from the principal that is borrowed for a set period
Permanent Buydown - ✔✔Borrower chooses to pay additional "discount points"
to buy down the interest rate for the life of the mortgage note
2/1 Buydown - ✔✔Used on fixed rate loans over two years
Set of two initial temporary-start interest rates that increase in stair-step fashion
until a permanent interest rate is reached
, Discount Point - ✔✔A form of pre-paid interest which effectively increases the
yield on the loan above the amount of the stated interest rate
CLTV
Combined Loan to Value - ✔✔An amount in addition to the Loan to Value, which
simply represents the first position mortgage or loan as a percentage of the
property's value
LTV
Loan to Value - ✔✔Ratio of a loan to the value of an asset purchased
PITI - ✔✔Principal, Interest, Taxes, Insurance
Refers to the components of a mortgage payment
DIF - ✔✔Housing to Debt
Ratio that measures an individual's ability to manage monthly payment and repay
debts
Forbearance - ✔✔Agreement between the lender and the borrower to delay
foreclosure
Loan Modification - ✔✔A permanent restructuring of the mortgage where one or
more of the terms of a borrower's loan are changed to provide a more affordable
payment
Primary Mortgage Market - ✔✔Where credit institutions originate loans
C. The maximum the rate can increase over the life of the loan - ✔✔When an
ARM has rate caps of 5/2/6, the 6 refers to what?
A. The maximum rate increase at the initial adjustment
B. The start rate for the loan
C. The maximum the rate can increase over the life of the loan
D. The rate maximum the rate can decrease over the life of the loan
B. The borrower qualified at the buydown rate - ✔✔When utilizing a temporary
buydown to lower the interest rate on a FHA loan, which of the following are
correct
A. The borrower qualified at the note rate
B. The borrower qualified at the buydown rate
C. The rate cannot be more than 2% below the note rate
D. Seller or builder can pay the discount points to buydown the rate
A. Age - ✔✔All of the following are violations of the Fair Housing Act EXCEPT
A. Age
B. National Origin
,C. Disability
D.Religion
Encrumbrance - ✔✔Claim against property held by one who is not the legal
owner
Trigger Term - ✔✔Advertised term that requires additional disclosures
Advertising Disclosure - ✔✔An advertisement must be presented "clearly and
conspicuously" to keep from being deceptive, unfair, or otherwise violate a
Commission rule
Waving Right of Rescission - ✔✔Extenuating circumstances such as "bona fide
personal financial emergency
Right of Rescission - ✔✔Right that borrowers have to cancel a loan or line of
credit with a lender within three days of closing
Business Day - ✔✔When creditors office is open to the public, a calendar working
day except Sunday or a federal holiday
Application - ✔✔Financial information used for purposes of obtaining an
extension of credit
Disclosure - ✔✔The act of making new information known
,FTC
Federal Trade Commission - ✔✔Mission is to promote consumer protection and
eliminate and prevent anticompetitive business practices
CFPB
Consumer Financial Protection Bureau - ✔✔Regulatory agency charged with
overseeing financial products and services offered to consumers
TILA
Truth in Lending Act - ✔✔Enacted 1968 promotes the informed use of consumer
credit by requiring disclosures about terms and costs and standardizes the
manner in which costs with borrowing are calculated and disclosed
Per Diem Interest - ✔✔Interest charged on a loan for one or more days
Annual Interest Rate Formula - ✔✔Principal (X) Interest Rate = Annual Interest
Rate
Interest Only Mortgage - ✔✔Mortgage where the mortgagor is only required to
pay off the interest that arises from the principal that is borrowed for a set period
Permanent Buydown - ✔✔Borrower chooses to pay additional "discount points"
to buy down the interest rate for the life of the mortgage note
2/1 Buydown - ✔✔Used on fixed rate loans over two years
Set of two initial temporary-start interest rates that increase in stair-step fashion
until a permanent interest rate is reached
, Discount Point - ✔✔A form of pre-paid interest which effectively increases the
yield on the loan above the amount of the stated interest rate
CLTV
Combined Loan to Value - ✔✔An amount in addition to the Loan to Value, which
simply represents the first position mortgage or loan as a percentage of the
property's value
LTV
Loan to Value - ✔✔Ratio of a loan to the value of an asset purchased
PITI - ✔✔Principal, Interest, Taxes, Insurance
Refers to the components of a mortgage payment
DIF - ✔✔Housing to Debt
Ratio that measures an individual's ability to manage monthly payment and repay
debts
Forbearance - ✔✔Agreement between the lender and the borrower to delay
foreclosure
Loan Modification - ✔✔A permanent restructuring of the mortgage where one or
more of the terms of a borrower's loan are changed to provide a more affordable
payment
