Sec5-36*

1. Question

A mortgage transaction involves a Power of Attorney. Which party is generally prohibited from serving as the borrower’s agent under the Power of Attorney?

A) The borrower's unrelated neighbor with no financial interest

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B) The lender, an employee of the lender, or an affiliate of the lender

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C) The borrower's adult sibling

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D) The borrower's attorney

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2. Question

A borrower wants an employee of the title company handling the closing to act as the agent under a Power of Attorney. Under the prohibited-agent rules, how should this generally be handled?

A) It is generally prohibited because a title company or title company employee is listed as a prohibited agent

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B) It is always permitted if the borrower signs a disclosure

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C) It is required whenever the borrower cannot attend closing

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D) It is permitted only if the loan is a refinance

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3. Question

A real estate agent involved in the transaction has a financial interest in the sale and wants to serve as the borrower’s Power of Attorney agent. What is the general rule?

A) The real estate agent may always serve as agent if licensed

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B) The real estate agent is generally prohibited from serving as agent when the agent has a financial interest in the transaction

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C) The real estate agent must serve as agent if the borrower is unavailable

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D) The real estate agent may serve only if the loan is FHA-insured

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4. Question

A loan originator is reviewing a Power of Attorney situation that may fall under an exception to the prohibited-agent rules. What should the MLO do?

A) Ignore the prohibition because exceptions always apply

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B) Automatically approve the Power of Attorney

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C) Check with the lender because an exception may apply only if certain conditions are met

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D) Require the borrower to cancel the transaction

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5. Question

A parent agrees to be a co-borrower to help a child qualify for a mortgage. What is generally true about co-borrowers in this type of transaction?

A) Co-borrowers do not take title and are not liable for repayment

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B) Co-borrowers take title to the property and are equally liable for repayment of the loan

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C) Co-borrowers only guarantee the loan but never appear on title

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D) Co-borrowers are responsible only for taxes and insurance

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6. Question

A borrower applies with a non-occupant co-borrower. How is the co-borrower’s income generally treated for qualifying purposes?

A) It is ignored in every case

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B) It is used only to calculate property taxes

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C) It is combined with the borrower's income for qualifying purposes

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D) It is used only if the co-borrower lives in the property

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7. Question

Under Fannie Mae guidance, a parent wants to help a child qualify as a non-occupant co-borrower. What must the occupying borrower generally be able to do?

A) Qualify alone with a back ratio of at least 43%

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B) Qualify only if the parent occupies the home

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C) Qualify only with no credit history

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D) Qualify without counting any debts

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8. Question

A borrower applies for an FHA loan with a non-occupant co-borrower. How does FHA treat their income for purposes of the 43% qualifying ratio?

A) FHA excludes all non-occupant co-borrower income

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B) FHA allows only the non-occupant co-borrower's income to be used

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C) FHA allows the income of the occupying borrower and non-occupant co-borrower to be combined

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D) FHA requires the occupying borrower to qualify alone in every case

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9. Question

An MLO is about to ask an applicant about the source of income other than salary or wages. What notice must be given under ECOA before requesting the source of certain income?

A) The applicant must be told that all alimony, child support, or separate maintenance income must be revealed

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B) The applicant must be told that income from alimony, child support, or separate maintenance need not be revealed if the applicant chooses not to reveal it

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C) The applicant must be told that only salary income may be considered

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D) The applicant must be told that retirement income is always excluded

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10. Question

A creditor is evaluating a borrower’s income and sees that part of the income comes from part-time employment. Under ECOA, how must this income be treated?

A) It may not be discounted or excluded on a prohibited basis merely because it comes from part-time employment

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B) It must always be excluded from qualifying income

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C) It may only be counted if the borrower has no full-time job

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D) It may be counted only for FHA loans

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11. Question

A borrower receives income from an annuity, pension, or other retirement benefit. Under ECOA, what may a creditor not do on a prohibited basis?

A) Require the borrower to disclose the property address

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B) Discount or exclude the income because it is derived from an annuity, pension, or other retirement benefit

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C) Require the borrower to list monthly debts

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D) Consider whether the loan is secured by real estate

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12. Question

A borrower wants to use alimony, child support, or separate maintenance payments as qualifying income. What may the creditor consider when evaluating that income?

A) Only whether the borrower has a checking account

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B) The amount and probable continuance of the income, based on the likelihood of its continuance

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C) Only the borrower's current property value

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D) Whether the borrower's employer approves the income

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