HUD Certification Exam: Deed Restrictions, Redlining, Fair Housing, & Mortgages, Study Guides, Projects, Research of Business Administration

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HUD Certification Exam Questions and

Answers 2024/

Deed Restrictions Legally enforceable terms that govern the use of real estate Redlining The practice of refusing to make residential loans or imposing more onerous terms on any loans made because of the predominant race, color, national origin, religion, sex, disability, or familial status of the area's residents. Civil Rights Act of 1968 Following the assassination of Dr. Martin Luther King Jr., Congress passed what monumental piece of legislation, which prohibits discrimination in housing sales, rentals, and financing based on race, color, national origin, religion, sex, disability and familial status? 7 The Fair Housing Act, as amended, protects how many characteristics? Reasonable Modification A property manager of an apartment complex that receives federal financial assistance installs a ramp so that a tenant in a wheelchair can easily access her first-floor apartment. Reasonable Accommodation Housing provider has a policy of requiring tenants to come to the rental office to pay their rent. A tenant with a mental disability, who is afraid to leave her unit, is allowed to mail her rent payment. True The Fair Housing Act does not prohibit a lender from showing potential clients information about different loans. Fair Housing Assistance Program (FHAP) Provides annual funding to state and local agencies that enforce fair housing laws that are substantially equivalent to the Fair Housing Act. These funds go towards an agency's capacity building, administrative costs, investigative and enforcement efforts, training and other projects designed to support enforcement of fair housing law. Fair Housing Initiatives Program (FHIP)

Provides funding to fair housing organizations and nonprofits that assist people who may have been victims of housing discrimination. Marketing Analysis Aim is to identify groups of people who would benefit most if targeted by the campaign, the characteristics of these people, and their expectations. Networking Event The opportunity to increase awareness of the plans and actions of housing industry members, private organizations and foundations, public housing agencies, neighborhood groups, regional organizations, and others to further fair housing objectives. Personal Information The section of the credit report that contains employer details. Account Information The section of a credit report that contains information about a student loan. Public Records The section of the credit report that contains court information such as a bankruptcy. Inquiries The section of the credit report that will show recent attempts to open a credit card. Consumer Rights The section of the credit report that contains information about how to correct inaccuracies. Account History Credit: Payment history of accounts, including late payments, delinquencies, judgments, and liens. Amounts Owed Credit: Ratio of total credit extended to the amount of credit owed. Length of Credit History Credit: Overall length of credit history in the report as well as the average age of accounts. Types of Credit Credit: Variety of accounts (e.g. credit card, auto loan, mortgage) New Credit Credit: Number of recent credit inquiries, as well as new credit accounts. AnnualCreditReport.com Where does a client go to get a free credit report? Fair Credit Reporting Act (FCRA) You have the right to dispute information in your credit file that is incomplete, inaccurate, or unverifiable. Fair and Accurate Credit Transactions Act (FACTA) You have the right to a free annual credit report. Fair and Accurate Credit Transactions Act (FACTA) You have the right to place a fraud alert on your credit file.

Fair Credit Reporting Act (FCRA) You have the right to know what is in your credit file. Fair Credit Billing Act (FCBA) Which federal law protects a consumer's right to dispute a billing error associated with his/her credit card account. Fair Credit Reporting Act (FCRA) What act limits employers access to persons credit report. Wire Transfer Fee Fee charged when a client sends a payment to another account electronically through electronic funds transfer (EFT) Overdraft Fee Fee charged when an account doesn't have money to cover a purchase and the financial institution loans money to complete the payment. Stop Payment Fee Fee charged to invalidate a check before it is cashed. NSF Fee Fee charged if there is not enough money in an account to cover a check payment of other purchase. CD; Money Market; High-Interest Account Examples of accounts that would be ideal for short-term large purchase savings Renters Insurance An insurance policy that provides coverage for damages, within a rental property, to renters' belongings and liability. Discount Points A type of pre-paid interest normally paid at closing and generally calculated to be equivalent to 1% of the total loan amount Default The inability to make timely payments or fulfill legal obligations of loan terms. Equity Value of ownership interest in property. Foreclosure A legal process in which mortgaged property is sold to pay the loan of a defaulting borrower. Escrow Funds to be used for specific purposes by parties carrying out a mutual transaction, deposited with a third party. Closing Costs Fees for final property transfer that are not included in the price of the property. Homeowners Insurance

An insurance policy that can provide coverage for damages to a dwelling and contents that belong to the homeowner. Front-end Ration A rate that calculates a borrower's housing-related obligations as a percentage of gross monthly income. AKA - Housing Ratio Conventional Loan A mortgage loan backed by private lenders. Loans with a DP less than 20% of purchase price may require private mortgage insurance (PMI) Principal The amount of money borrowed to buy a house or the amount of the loan that has not been paid back to the lender. Mortgage Insurance Premium (MIP) A monthly payment, usually part of the mortgage payment for FHA loans, paid by a borrower for mortgage insurance. Private mortgage Insurance (PMI) Insurance policy that protects a lender from potential risks when a homebuyer pays less than 20% for a down payment. Ground Rent An arrangement in which the owner of a dwelling or structure does not own the land on which the structure resides. Association Dues Charged by community or Homeowners Association to pay for repairs, upkeep, landscaping, improvements and property management. Adjusted Gross Income Gross income minus adjustments, or reductions, that one is eligible for, such as deductions for unreimbursed business expenses, tuition and fees, and contributions to certain retirement accounts. Profit and Loss Statments A summary of revenue, costs, and expenses incurred during a defined period, such as a fiscal year. Back-End Ratio A rate that calculates a borrower's total monthly debt, including housing and other debt obligations, as a percentage of gross monthly income. Character Credit history, employment history, and housing stability to determine the likeliness that the borrower will repay their debts Capacity Lender considers consistency of employment and income, adequacy of income to repay debt, recurring debts and frequency and type of wages

Capital Lenders inquire about how much money a borrower has saved to pay a deposit or down payment for the home intended to purchase. Collateral Lenders often request a borrower to pledge specific property or assets as collateral to secure repayment of loan. Front-end ratio for obtaining a conventional loan 28% Front-end ratio for obtaining an FHA loan 31% Affordable front-end ratio for renters 30% Per FHA, you are considered self-employed if you have ___% or greater ownership interest in a business. 25% Subprime Mortgage Loans A type of mortgage with less stringent lending and underwriting terms and conditions, usually offered to borrowers with blemished or limited credit histories. Type of mortgage that is a good fit for those that have limited funds for a down payment and closing costs FHA Mortgage Type of loan that may be a good fit for those that have a poor credit history and/or are ineligible for other loans Subprime Mortgage Loan Type of mortgage may be a good fit for eligible veterans, suitable credit and sufficient income and have a certificate of eligibility. VA Loan Type of mortgage may be a good fit for those who want to live in eligible rural areas, make less than 115% AMI, need flexible credit guidelines, may not have funds for a DP USDA Loan The midpoint in the family income range for a metropolitan statistical area of for the non- metropolitan parts of a state Area Median Income Fixed Rate Mortgage Typically paid off in 30 years, has an interest rate that doesn't fluctuate. Adjustable Rate Mortgage

Have an initial interest rate that applies for a defined period of time and then adjusts at a pre-determined intervals for the life of the loan. Second Mortgage A subordinate loan on a property Loan-to-Value Ratio A percentage calculated by dividing the amount of the outstanding loan amount by the sales price or appraised value of the home When must your lender terminate PMI? 78% or at midpoint of the loan. You can request earlier once principal balance falls below 80% of original loan value HOME Investment Partnership Program HUD program that provides grants to states and localities for building, buying, and/or rehabilitating affordable housing for rent or homeownership or providing direct rental assistance to low-income people. Community Development Block Grant Program HUD program that provides grants to states and localities to provide decent housing and a suitable living environment and to expand economic opportunities, principally for low-and-moderate income persons Public Housing Agencies A state, county, municipality, or other government agency that develops or operates low-income housing. Fair Market Rent A determination of the monthly rent of a rental property, calculated by HUD. Factored by geography and unit size, sets payment standards for public housing programs Housing Choice Voucher Commonly referred to as Section 8; distributed locally by PHAs where you are free to choose any housing that meets program requirements Project Based Voucher Allows PHAs to allocate up to 20% of its housing choice vouchers for project-based vouchers attached to specific housing units If client has a project based voucher and moves out of the unit, do they lose the voucher assitance? Yes What is the purpose for the Veterans Affairs Supportive Housing (VASH) program To end veterans homelessness What is the purpose of the Housing Opportunities for Persons with AIDS (HOPWA) program To assist with housing needs of people living with HIV/AIDS Pre-Approval When a lender commits to lend a fixed loan amount based on review of completed loan application, credit reports, debt, savings and a review by an underwriter.

Balloon Payments An oversize payment due at the end of a mortgage Pre-Payment Penalty A provision in some loans that charges a fee to a borrower who makes mortgage payments ahead of schedule. Equal Credit Opportunity Act (ECOA) Requires lenders to make credit available equally without discrimination based on race, color, religion, national origin, age, sex, marital status, or receipt of income form public assistance programs Real Estate Settlement Procedures Act (RESPA) Prohibits certain abusive practices that increase the cost of settlement services. Requires mortgage transaction disclosures that describe closing costs, lender servicing and escrow account practices, and business relationships Truth in Lending Act (TILA) Requires lenders disclose important information to protect consumers against inaccurate and unfair loan billing and credit card practices, it requires lenders to provide consumers with loan cost information so that they can comparison shop. Know Before you Owe (TRID) requires easier to use mortgage disclosure forms that clearly outline the terms of the mortgage to the borrower and provide detailed explanations about how form should be completed and used. The Know Before you Owe rule combined the Good Faith Estimate and the Truth in Lending disclosure and became what document? Loan Estimate The Know Before you Owe rule combined the HUD-1 and the final TIL disclosure became what document? Closing Disclosure Loan Estimate Designed to help consumers understand the key features, costs, and risks of the mortgage loan for which they are applying, must be provided to consumers no later than three business days after they submit a loan application Closing Disclosure Designed to help consumers understand all of the costs of the transaction, must be provided to consumers at least three business days before closing. Home Ownership and Equity Protections Act (HOEPA) Federal law enforcing special disclosure requirements and restrictions on terms for loans that meet high- cost mortgage tests. What is the biggest factor in determining the cost of your insurance? Location of your home

What item is critical to consider when working with a client to prepare a household system maintenance plan? Target Replacement Date When preparing a emergency preparedness plan, where is the best location for meeting point? A location outside of the neighborhood, preferably a place where your family can live temporarily. Home Equity Loan Provides a lump sum of money for home improvements - often referred to as a second mortgage Home Equity Line of Credit (HELOC) A line of credit from which you can borrow at any time during the draw period, up to your credit limit. FHA 203k Loan A loan insured by FHA to provide you with an initial loan for purchasing a home as well as funding for home improvement. Streamline 203k Loan Permits homebuyers and homeowners to finance up to $35K into their mortgage to repair, improve, or upgrade their home. Title 1 Loan A loan insured by FHA that may be used for alterations, repairs, and site improvements on single family homes and for alterations and repairs on multifamily homes. Energy Efficient Mortgage (EEM) Assists individuals to purchase an energy efficient home or refinance a home to make energy efficient improvements HELOC Best Improvement loan: A client's home improvement plan consists of multiple expenses that may be paid over an extended period of time. FHA 203k Loan Best improvement loan: A client intends to purchase a home that needs major repairs and will make those repairs with funding rolled into the mortgage loan. Energy Efficient Mortgage Best loan: A client would like to add insulation to the basement and attic as well as seal air leaks in order to reduce the home's energy consumption. Cash-Out Refinancing Best Improvement loan: A client leverages home equity through a new, larger loan to access funding to make improvements to the home Home Equity Loan Best Improvement loan: A client's home improvement plan consists of a large one-time expense. Streamlined 203k Loan

Best loan: There are a handful of minor repairs that a client would like to make to the home that he is buying. He expects that they will be complete in just a few months. Special Assessments Funds collected to pay for large maintenance projects that benefit the entire community. Teaser Rate An initial temporary interest rate on an ARM that results in lower mortgage payments and only remains in effect for a short period of time before increasing. Dual Tracking The process that occurs when the servicer moves forward with foreclosure while simultaneously working with the borrower to avoid foreclosure. Servicemembers Civil Relief Act An act that protects military personnel and their dependents in issues related to housing, including certain protections against default judgement, foreclosure and eviction Issuance of New Mortgage Rules To make it easier for borrowers to understand loan terms, to require homeownership counseling for some mortgages, and to expand protections Hardest hit Fund To enable 18 states and the District of Columbia to develop locally tailored programs to assist struggling homeowners in their community CFPB To create a federal agency charged with addressing failures of consumer protections Making Home Affordable To help homeowners avoid foreclosure, stabilize the housing market, and improve the economy National Mortgage Settlement To penalize five financial institutions for deceptive lending and foreclosure practices