#1
What is an Adjustable Rate Mortgage (ARM) primarily known for?
Having an interest rate that can change periodically
ExplanationInterest rate changes in ARM
#2
What is the purpose of a Good Faith Estimate (GFE) in mortgage transactions?
To disclose the lender's fees and other settlement costs to the borrower
ExplanationDisclose lender fees and settlement costs
#3
What is the primary function of the Consumer Financial Protection Bureau (CFPB) in relation to mortgages?
To ensure fair and transparent practices in the mortgage industry
ExplanationEnsure fair practices in mortgage industry
#4
What is a balloon mortgage payment in the context of mortgage financing?
A large final payment that pays off the remaining balance of the mortgage
ExplanationLarge final payment to clear mortgage balance
#5
What is the primary function of the Office of the Comptroller of the Currency (OCC) in mortgage regulation?
To ensure the safety and soundness of national banks and federal savings associations
ExplanationEnsure safety of national banks and savings associations
#6
What is the Loan-to-Value (LTV) ratio in mortgage financing?
The ratio of the loan amount to the property's appraised value
ExplanationLoan amount compared to property value
#7
Which government-sponsored enterprises play a significant role in the secondary mortgage market in the United States?
Fannie Mae and Freddie Mac
ExplanationFannie Mae and Freddie Mac in secondary market
#8
What is the Debt-to-Income (DTI) ratio used for in mortgage financing?
To assess the borrower's ability to manage monthly payments
ExplanationAssess borrower's payment management ability
#9
Which federal agency insures mortgages for qualifying borrowers and plays a crucial role in providing affordable housing options?
Federal Housing Administration (FHA)
ExplanationFHA insures mortgages for affordable housing
#10
What is the purpose of the Truth in Lending Act (TILA) in mortgage financing?
To provide borrowers with information about the true cost of borrowing
ExplanationInform borrowers about borrowing costs
#11
What is the purpose of Private Mortgage Insurance (PMI) in mortgage financing?
To protect the lender in case of borrower default
ExplanationProtect lender from borrower default
#12
In mortgage regulation, what does the term 'RESPA' stand for?
Real Estate Settlement Procedures Act
ExplanationRESPA: Real Estate Settlement Procedures Act
#13
What is a jumbo mortgage in the context of mortgage financing?
A mortgage for luxury homes that exceed conventional loan limits
ExplanationMortgage for luxury homes exceeding loan limits
#14
In mortgage terminology, what does the acronym 'ARM' stand for?
Adjustable Rate Mortgage
ExplanationARM: Adjustable Rate Mortgage
#15
What is the role of a mortgage underwriter in the loan approval process?
To assess the borrower's creditworthiness and risk
ExplanationAssess borrower creditworthiness and risk