Mortgage Products and Lending Practices Flashcards
7 cards from real CMC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Mortgage Products and Lending Practices flashcards as text
The VA loan benefit does NOT require which of the following?
Answer: Private mortgage insurance (PMI) on loans with less than 20% down
VA loans do not require private mortgage insurance regardless of the down payment amount, which is one of their primary benefits for eligible veterans.
Under TRID (TILA-RESPA Integrated Disclosures), the Closing Disclosure must be provided to the borrower at least how many business days before consummation?
Answer: 3 business days
TRID requires the Closing Disclosure to be delivered to the borrower at least 3 business days before loan consummation to allow time for review.
An interest-only mortgage during the interest-only period results in which of the following?
Answer: No reduction in the outstanding principal balance
During an interest-only period, all monthly payments cover only interest charges, leaving the principal balance completely unchanged.
Which index is most commonly used to set the adjustable rate on a Home Equity Line of Credit (HELOC)?
Answer: Wall Street Journal Prime Rate
HELOCs are most commonly tied to the Wall Street Journal Prime Rate, which moves in tandem with the Federal Reserve's federal funds rate.
What does a 'due-on-sale' clause in a mortgage contract prevent?
Answer: The assumption of the mortgage by a new buyer without lender approval
A due-on-sale clause requires the full loan balance to be paid when the property is sold, effectively preventing loan assumption without lender approval.
Which USDA loan program provides direct loans to low- and very-low-income borrowers, with the government acting as the lender?
Answer: USDA Section 502 Direct Loan Program
The USDA Section 502 Direct Loan Program is funded and administered directly by the USDA to assist low- and very-low-income rural borrowers.
A lender originates a mortgage and immediately sells it to an investor while retaining the right to collect payments and manage the escrow account. The lender is acting as a:
Answer: Mortgage servicer
A mortgage servicer collects loan payments, manages escrow accounts, and handles customer service on behalf of the loan owner after the loan has been sold.