1. Which of the following represent key differences between private mortgage insurance and FHA mortgage insurance?
a. FHA insurance covers all default losses while private mortgage insurance does not.
b. Private mortgage insurance covers all default losses while FHA insurance does not.
c. Private mortgage insurance is always required while FHA is not.
d. Both b and c are key differences between private mortgage insurance and FHA insurance.
2. Which of the following caps on adjustable-rate mortgages can lead to negative amortization?
a. Interest rate caps
b. Payment caps
c. Both a and b can lead to negative amortization
d. Neither a nor b can lead to negative amortization.
3. This type of mortgage enables borrowers to receive monthly payments from a lender who will be repaid when either the house is sold or the borrower dies:
a. Adjustable rate mortgage
b. Interest only mortgage
c. Home equity line of credit
d. Reverse mortgage
e. Principal only mortgage
4. Which of the following is NOT a lender concern when underwriting a home loan?
a. Collateral
b. Conventional
c. Creditworthiness
d. Capacity
5. A ______________ state takes much less time for a lender to take possession during foreclosure than a ______________ state.
a. mortgage; deed of trust
b. title; escrow
c. deed of trust; mortgage
d. escrow; title
6. The Truth-in-Lending Act (TILA) includes all of the following except:
a. Statement of Annual Percentage Rate (APR)
b. Variable rate disclosure
c. Prepayment penalties
d. Right of Rescission for 30 days with regards to the borrower