Mortgage Operations

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Number 1. The reduction in the outstanding principal balance of a traditional, fixed rate mortgage which is built into the repayment schedule.

Correct Answer: Amortization

Number 2. A federal act that establishes standards for reinvestment in local communities by mortgage originators and establishes fair lending practices to ensure access to various constituencies, communities and neighborhoods.

Correct Answer: Community Reinvestment Act Of 1977

Number 3. A federal law that prohibits discrimination in the housing market based on a variety of factors, characteristics or attributes of the homebuyer or tenant.

Correct Answer: Fair Housing Act

Number 4. A program introduced by HUD in 1999 that was designed to increase awareness and reliance on home inspections by applicants for FHA loans to help avoid acquisition of properties with major defects or other deferred maintenance items that should be corrected up front to protect the homebuyer and helps maintain the value of the underlying collateral.

Correct Answer: Homebuyer Protection Plan

Number 5. A federal department that is charged with overseeing housing markets, protecting homeowners from abuses and discrimination, and encouraging economic development and vitality in our communities.

Correct Answer: Housing and Urban Development (HUD)

Number 6. A ratio that is used to calculate the fixed payment that is necessary to provide a return on (e.g., interest) and a return of (e.g., principal) over a stated time period.

Correct Answer: Loan Constant

Number 7. The act of collecting payments, disbursing funds and paying obligations to protect the integrity and accessibility of the underlying collateral.

Correct Answer: Loan Servicing

Number 8. A commitment that is entered into between a borrower and lender that results in fixing the interest rate that will be charged at the time of closing.

Correct Answer: Locking a Loan

Number 9. In granting a forward commitment of a mortgage at a specified rate, the maximum term or time period over which the obligation will be binding.

Correct Answer: Maximum Lock

Number 10. The total mortgage payment per period including interest, and in the case of an amortizing loan, principal payments.

Correct Answer: Monthly Debt Service

Number 11. The repayment factor that represents the constant, periodic payment necessary to provide a blended payment on $1 for principal and interest that will fully amortize the $1 over the contract term of a loan.

Correct Answer: Mortgage Coefficient

Number 12. The mortgage cap rate that is calculated by dividing the annualized mortgage payments by the present value of the mortgage; in a fixed rate, fully amortizing loan, the mortgage constant equals the mortgage coefficient.

Correct Answer: Mortgage Constant

Number 13. A periodic payment that represents a blend of principal and interest made from a borrower to a lender or their agent.

Correct Answer: Mortgage Payment

Number 14. The distinguishing attributes or features of a particular type of mortgage arrangement including the type of amortization, term, rate, and insurance or guarantees.

Correct Answer: Mortgage Program

Number 15. The management of outstanding mortgages including collection, distribution of funds, recording, management of escrow deposits and distributions, management of delinquencies and oversight of foreclosures for the benefit of an investor or client.

Correct Answer: Mortgage Servicing

Number 16. The principal balance that remains to be paid at any point in time as a result of amortization and/or partial repayment of the initial capital base.

Correct Answer: Outstanding Balance

Number 17. A ceiling or maximum adjustment that can be made on a variable rate mortgage in any one step.

Correct Answer: Payment Adjustment Cap

Number 18. Relating to home mortgages, local property taxes and property insurance. These outlays, represent the largest fixed periodic expenses for most homeowners, and are typically used when determining eligibility for mortgages.

Correct Answer: Principle, Interest, Taxes & Insurance (PITI)

Number 19. A federal law that is designed to protect consumers from abusive or deceptive practices associated with the purchase and financing of a home.

Correct Answer: Real Estate Settlement Procedures Act (RESPA)

Number 20. The contractually agreed mortgage payment that will be required during the mortgage including any interest and principal repayment, either positive (e.g., loan amortization) or negative (e.g., negative amortization).

Correct Answer: Scheduled Mortgage Payment