Real estate finance, loans and the federal rules

A borrower executes a promissory note for a "30 due in 5" balloon mortgage. Which statement accurately describes how the repayment schedule for this specific loan product functions?

1. The principal is split into five annual payments while interest is heavily amortized over 30 full years.
2. Monthly obligations mirror a 30-year amortized term with a full balance payoff required at year five.
3. Installments are completely fixed for 30 years but subject to an unspecified margin rate every five years.
4. The borrower must submit extra principal contributions every five years until the 30-year term is finished.
5. The borrower makes interest-only payments for five years before shifting to a higher 30-year schedule.

A title firm pays a brokerage $1,000 monthly to display brochures, contingent on the brokerage directing five closings monthly to the title firm. Why does this violate RESPA regulations?

1. It constitutes a prohibited kickback for referral of settlement service business
2. Brokerages are strictly prohibited from advertising specific title companies in their offices
3. The payment amount exceeds the maximum allowable marketing threshold under federal regulations
4. Marketing agreements between these entities require pre-approval from the Consumer Financial Bureau
5. The arrangement fails to provide consumers with an affiliated business arrangement disclosure

A borrower is making the 240th monthly payment on a standard 30-year fixed-rate fully amortizing mortgage at 6% interest. Which statement accurately characterizes the composition of this specific payment compared to the initial payments?

1. The outstanding principal balance dictates that interest still dominates the total sum
2. The principal portion is now larger than the interest portion
3. The interest portion has gradually increased to constitute the majority of the payment
4. The interest and principal components remain identical to the first scheduled payment
5. The payment is primarily allocated toward property taxes and hazard insurance premiums

Under TRID regulations, which of the following transaction modifications strictly requires the lender to issue a revised Closing Disclosure and triggers a mandatory new three-business-day waiting period before consummation?

1. A minor adjustment to the final property tax escrow
2. The buyer adding an optional home warranty to the deal
3. A typo correction in the seller's property address
4. An APR increase of more than 0.125 percentage point on the loan
5. A change in the real estate agent's commission split

A buyer purchases a home for $420,000 and it appraises for the exact same amount. They secure a conventional mortgage and make a $65,000 down payment. Based on standard underwriting guidelines, which of the following statements is accurate regarding private mortgage insurance (PMI)?

1. PMI is required only if the borrower's debt-to-income exceeds set thresholds.
2. PMI is fully optional since the home appraised for the exact purchase price.
3. PMI is mandatory because the calculated loan-to-value exceeds eighty percent.
4. PMI is not required because the provided down payment exceeds standard limits.
5. PMI is only necessary if the borrower utilizes a non-conventional loan product.

A veteran applies for a VA loan but states the property will be a vacation home. What is the MOST appropriate underwriting action?

1. Deny the loan because VA loans require primary residence occupancy
2. Condition approval on obtaining secondary residence insurance
3. Approve the loan as a second home with a higher down payment
4. Request a certificate of eligibility but ignore occupancy
5. Approve as an investment property under VA guidelines

Which statement correctly describes the effect of an unscheduled principal-only payment on a fixed-rate fully amortizing mortgage?

1. Monthly payment stays the same, loan term shortens
2. Monthly payment stays the same, but no effect without recast
3. Interest portion increases in subsequent monthly payments
4. Monthly payment decreases, and loan term remains unchanged
5. Monthly payment increases, and total interest also increases

A loan officer denies a mortgage applicant after learning the applicant receives public assistance, tells a married applicant a co-signer is needed solely because of marital status, and provides no denial notice. Which ECOA violations occurred?

1. No violations because lenders may consider public assistance and marital status
2. Failure to provide adverse action notice only
3. Discrimination based on public assistance, marital status, and failure to provide adverse action notice
4. Discrimination based on marital status only
5. Discrimination based on public assistance and failure to provide adverse action notice, but not marital status

A borrower has a housing ratio of 31% and a total DTI of 45%. Based on typical program guidelines, which loan option is MORE likely to approve the loan?

1. FHA, which permits higher back-end ratios with compensating factors
2. VA, if the borrower is not a veteran
3. USDA, without income limits
4. Conventional conforming, because 45% is always acceptable
5. Either equally, because all programs use identical DTI limits

Which of the following residential loan structures will mathematically result in the highest total lifetime interest paid, assuming all loans are fully amortized and held to maturity without additional principal payments?

1. A 30-year fixed-rate mortgage at 6.5% interest
2. A 15-year adjustable-rate mortgage capped at 7.5%
3. A 15-year fixed-rate mortgage at 7.0% interest
4. A 20-year fixed-rate mortgage at 6.5% interest
5. A 10-year fixed-rate mortgage at 8.0% interest

A Loan Estimate included a $500 appraisal fee (a service the borrower could not shop for) and $200 in recording fees. On the Closing Disclosure, the appraisal fee increased to $650 and recording fees increased to $210. How much is the required lender credit to cure tolerance violations?

1. $210
2. $1,150
3. $160
4. $150
5. $500

When reviewing TRID integrated disclosure documents, which of the following specific transaction items typically appears on the final Closing Disclosure but is NOT required to be itemized on the initial Loan Estimate?

1. The real estate brokerage commissions paid at closing
2. The projected principal and interest payment schedules
3. The estimated recording fees and local transfer taxes
4. The initial appraisal and credit report fee estimates
5. The homeowner association dues and assessment charges

A lender receives a complete residential mortgage application on Monday. The lender places the Loan Estimate in the mail on Wednesday. No federal holiday falls that week. Under TRID rules, when is the borrower legally presumed to have received the document?

1. Saturday of the same calendar week
2. Thursday of the same calendar week
3. Monday of the coming calendar week
4. Friday of the current calendar week
5. Tuesday of the next calendar week

During the mortgage underwriting process, a loan officer notices a recent $15,000 cash deposit in a borrower's bank account. The borrower provides a verbal explanation that the funds were accumulated in a home safe over several years. According to standard underwriting guidelines, what is the required lender action?

1. Accept verbal explanation for funds
2. Proceed with approval based on assets
3. Require written source documentation
4. Add the deposit to the borrower's income
5. Exclude the bank balance from assets

A veteran receives a 10% service-connected disability rating. Under VA loan rules, is the veteran required to pay the VA funding fee?

1. Yes, the veteran must pay the full funding fee.
2. Yes, the veteran must pay the funding fee but it can be financed.
3. Yes, the veteran must pay a reduced funding fee based on disability rating.
4. No, the veteran is exempt from the funding fee.
5. No, the veteran is exempt only if the rating is at least 30%.