P3-89 quiz

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Question 1 of 7

1. Question
Which of the following best describes consumer credit as used in the text?
- A) Any loan used to purchase or refinance a home.
- B) Personal, usually unsecured debt taken on to buy everyday goods and services, such as credit cards.
- C) Only long-term investment loans such as mortgages.
- D) Only student loans used to pay for education.
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Question 2 of 7

2. Question
According to the text, which statement about a mortgage lender is accurate?
- A) Mortgage lenders only service loans and can never fund them.
- B) Mortgage lenders are government agencies that insure all residential loans.
- C) Mortgage lenders may not work with mortgage brokers under any circumstances.
- D) Mortgage lenders issue loans and may handle application, underwriting, and funding directly, or receive applications through mortgage brokers.
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Question 3 of 7

3. Question
What role does a mortgage investor play in the mortgage market?
- A) Buying mortgage loans from lenders to free up funds for more lending.
- B) Originating loans directly to consumers on behalf of lenders.
- C) Performing property appraisals before loans are approved.
- D) Collecting monthly payments on behalf of borrowers.
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Question 4 of 7

4. Question
Which description best matches “Loan Payment Collection” as discussed in the text?
- A) The process of setting interest rates for newly originated loans.
- B) The borrower’s voluntary prepayment of principal to shorten the loan term.
- C) The process of pursuing payments of debts owed, often through collection agencies that work for a fee or percentage of the amount owed.
- D) The lender’s internal quality control review of closed loans.
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Question 5 of 7

5. Question
Which of the following is listed as an example of an origination service in the text?
- A) Purchasing closed loans from lenders to hold in an investment portfolio.
- B) Completing the loan application, collecting borrower documentation, and preparing the file for underwriting.
- C) Performing yearly escrow analysis on existing loans.
- D) Issuing property tax bills on behalf of local governments.
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Question 6 of 7

6. Question
What does an “assignment of mortgage” indicate?
- A) The borrower has completed paying off the mortgage in full.
- B) The lender has modified the interest rate and term of the loan.
- C) The mortgage has been subordinated to a new lien.
- D) The mortgage has been transferred from the original lender or borrower to a third party.
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Question 7 of 7

7. Question
Which situation best illustrates “payment shock” as defined in the text?
- A) A borrower’s payment jumps sharply when an interest-only or payment-option ARM begins amortizing, making the new amount unaffordable.
- B) A borrower’s payment decreases after refinancing to a lower rate.
- C) A borrower’s payment remains level for 30 years on a fixed-rate loan.
- D) A borrower’s payment includes taxes and insurance in an escrow account.
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