#1
Which regulatory body oversees mortgage lending practices in the United States?
Consumer Financial Protection Bureau
ExplanationRegulates mortgage lending practices.
#2
What does LTV stand for in the context of mortgage lending?
Loan-to-Value
ExplanationIndicates loan amount relative to property value.
#3
Which of the following is NOT a common type of mortgage loan?
Insurance mortgage
ExplanationNot a recognized mortgage type.
#4
What is the primary purpose of an escrow account in mortgage lending?
To hold funds for property taxes and insurance premiums
ExplanationManages property-related payments.
#5
What is the debt-to-income (DTI) ratio used for in mortgage lending?
To assess the borrower's ability to repay the loan based on their monthly debt payments relative to their income
ExplanationAssesses borrower's repayment capability.
#6
Which of the following is NOT typically included in a mortgage payment?
Homeowner's insurance
ExplanationUsually paid separately from mortgage.
#7
What is the maximum debt-to-income (DTI) ratio typically allowed for qualified mortgages?
43%
ExplanationCommonly accepted maximum DTI ratio.
#8
What is the purpose of the Truth in Lending Act (TILA)?
To ensure lenders provide clear information about loan terms and costs
ExplanationEnsures transparency in loan information.
#9
What is the purpose of the Home Mortgage Disclosure Act (HMDA)?
To ensure fair lending practices and monitor the availability of credit
ExplanationPromotes fair lending and credit availability monitoring.
#10
What is private mortgage insurance (PMI)?
Insurance that protects the lender in case the borrower defaults on the loan
ExplanationProtects lenders against borrower default.
#11
What is a jumbo mortgage?
A mortgage with an amount that exceeds the conforming loan limits set by Fannie Mae and Freddie Mac
ExplanationExceeds standard loan limits.
#12
What is the purpose of the Qualified Mortgage (QM) rule?
To ensure that lenders make loans that borrowers can afford to repay
ExplanationEnsures borrower affordability of loans.
#13
What is a prepayment penalty in mortgage lending?
A fee charged if the borrower pays off the mortgage early
ExplanationPenalizes early mortgage payoffs.
#14
What is the purpose of the Dodd-Frank Wall Street Reform and Consumer Protection Act in relation to mortgage lending?
To establish stricter regulations to prevent another financial crisis
ExplanationImposes tighter regulations for financial stability.