Cwmc Module 14: Foreclosure Competency Test
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This quiz is part of LFE Institute's CWMC (Certified Workplace Money Coaching) course. It will test your proficiency in the Foreclosure Module (Module 14) of the program. The questions are all multiple choice, and are designed to be a review of this Module. Let LFE know when you've successfully completed this test and are ready to begin the next Module.
Correct answers required for passing grade: 15/18
- 1.
Which of the following are red flags for possible foreclosure scams? (check all that apply)
- A.
Ads claiming to purchase homes to alleviate mortgage debt
- B.
Offers to stop foreclosure immediately with a new government program
- C.
Request for payment up front for foreclosure services
- D.
Suggest exaggeration of income on application forms for loan approval to avoid foreclosure
Correct Answer(s)
A. Ads claiming to purchase homes to alleviate mortgage debt
B. Offers to stop foreclosure immediately with a new government program
C. Request for payment up front for foreclosure services
D. Suggest exaggeration of income on application forms for loan approval to avoid foreclosureExplanation
Red flags for possible foreclosure scams include ads claiming to purchase homes to alleviate mortgage debt, offers to stop foreclosure immediately with a new government program, requests for payment upfront for foreclosure services, and suggestions to exaggerate income on application forms for loan approval to avoid foreclosure. These practices are often used by scammers to take advantage of homeowners in distress and should be approached with caution.Rate this question:
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- 2.
Which of the following would you NOT recommend as a valuable Web site to learn more about foreclosures?
- A.
Http://www.foreclosureeducation.com/home
- B.
Http://www.homedepot.com
- C.
Http://ezinearticles.com/?Tips-For-Handling-Early-Signs-of-a-Foreclosure&id=129106
- D.
Http://www.hud.gov/foreclosure
- E.
Http://www.phfa.org/consumers/homeowners/alternatives.aspx
Correct Answer
B. Http://www.homedepot.comExplanation
The website http://www.homedepot.com would not be recommended as a valuable website to learn more about foreclosures because it is primarily a retail website for home improvement products and does not provide information or resources specifically related to foreclosures.Rate this question:
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- 3.
Solutions to foreclosures are:
- A.
Always easy
- B.
An entitlement
- C.
Possible
- D.
Very rare
- E.
Effortless
Correct Answer
C. PossibleExplanation
The correct answer is "Possible." This answer suggests that solutions to foreclosures are not always guaranteed or guaranteed to be easy, but they are feasible or achievable. It implies that there are potential ways to address or prevent foreclosures, although they may require effort and resources.Rate this question:
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- 4.
In Module 14, TARP stands for:
- A.
Tax Administration Reform Plan
- B.
Taxpayer Arranged Responsibility Policy
- C.
Troubled Asset Relief Program
- D.
The Average Reasonable Person
- E.
Treasury Allocation Recovery Process
Correct Answer
C. Troubled Asset Relief ProgramExplanation
The correct answer is Troubled Asset Relief Program. TARP was a program initiated by the U.S. government in response to the 2008 financial crisis. It aimed to stabilize the financial system by purchasing troubled assets from banks and other financial institutions. The program provided funds to banks, insurance companies, and automakers to prevent their collapse and stimulate economic growth. TARP played a crucial role in preventing a complete financial meltdown and has been credited with helping to restore stability to the financial system.Rate this question:
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- 5.
Which of these statements are NOT true regarding Foreclosure Auction Guides? (check all that apply)
- A.
Buyers must be notified of possible maintenance problems or home defects
- B.
Auction guide information is not specific or detailed
- C.
Guides are intended to assist finding foreclosed homes or land
- D.
These publications are usually free
- E.
A buyer should ask for a written policy for returning the guide before purchasing
Correct Answer(s)
A. Buyers must be notified of possible maintenance problems or home defects
D. These publications are usually freeExplanation
The statement "Buyers must be notified of possible maintenance problems or home defects" is not true regarding Foreclosure Auction Guides. These publications are usually free.Rate this question:
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- 6.
Choose the answer that best completes this sentence:"Even if your house has decreased in value, your lender may accept a _________"
- A.
Refund
- B.
Boat loan
- C.
Stock option
- D.
Short sale
- E.
Pool installation
Correct Answer
D. Short saleExplanation
A short sale is the best completion for the sentence because even if your house has decreased in value, your lender may accept a short sale. In a short sale, the lender agrees to accept less than the full amount owed on the mortgage, allowing the homeowner to sell the property and avoid foreclosure. This option is often chosen when the homeowner is unable to keep up with mortgage payments and owes more on the mortgage than the current value of the house.Rate this question:
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- 7.
Common claims made by foreclosure scam artists include: (check all that apply)
- A.
“We’ll stop your foreclosure”
- B.
“We’ll save your home”
- C.
“We guarantee to reduce your payments”
- D.
“We’ll contact your lender”
- E.
None of the above
Correct Answer(s)
A. “We’ll stop your foreclosure”
B. “We’ll save your home”
C. “We guarantee to reduce your payments”
D. “We’ll contact your lender”Explanation
The correct answer is "We’ll stop your foreclosure", "We’ll save your home", "We guarantee to reduce your payments", "We’ll contact your lender". These claims are common among foreclosure scam artists who prey on vulnerable homeowners facing foreclosure. They promise to stop the foreclosure process, save their homes, reduce their mortgage payments, and even offer to contact their lenders on their behalf. However, these claims are often false and are used to deceive homeowners into paying upfront fees or providing personal information. Homeowners should be cautious and seek assistance from legitimate sources when dealing with foreclosure issues.Rate this question:
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- 8.
Which of these actions is NOT advised to avoid a foreclosure?
- A.
Contact your lender immediately to explain your situation
- B.
Negotiate a temporary reduction or suspension of your payments
- C.
Ask to extend the term of the loan
- D.
Send the key and your mortgage documents to the lender
- E.
None of the above
Correct Answer
D. Send the key and your mortgage documents to the lenderExplanation
Sending the key and mortgage documents to the lender is not advised to avoid foreclosure because it essentially means voluntarily giving up ownership of the property. This action would not help in resolving the foreclosure situation or keeping the property. Instead, it is recommended to contact the lender, explain the situation, negotiate payment options, and explore alternatives such as loan term extension to prevent foreclosure.Rate this question:
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- 9.
According to LFE guidelines, the maximum number of colors Money Coaches should use in the text of an e-mail is:
- A.
1 color. Keep it simple.
- B.
2 colors. One color for body text and one color to highlight certain words or phrases.
- C.
3 colors. One color for body text and two colors to highlight certain words or phrases.
- D.
4 colors. Two colors for body text and two colors to highlight certain words or phrases.
- E.
5 colors. The text should be as colorful as possible to keep the reader interested.
Correct Answer
B. 2 colors. One color for body text and one color to highlight certain words or phrases.Explanation
According to LFE guidelines, Money Coaches should use a maximum of 2 colors in the text of an email. One color should be used for the body text, while the other color should be used to highlight specific words or phrases. This approach helps to keep the email visually appealing and easy to read, while also drawing attention to important information. Using more than 2 colors may make the email appear cluttered or overwhelming for the reader.Rate this question:
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- 10.
A Workplace Money Coach should:
- A.
Give advice when the employee specifically asks for it
- B.
Copy and paste text from the Internet into a response so that it is accurate and easy to read
- C.
Report employee foreclosures or bankruptcies (as disclosed in an employee’s e-mail) to the HR Director immediately
- D.
Do all of the above
- E.
Do none of the above
Correct Answer
E. Do none of the aboveExplanation
A Workplace Money Coach should not give advice unless specifically asked for it, as their role is to provide guidance and support rather than impose their opinions. Copying and pasting text from the Internet may not always be accurate or relevant to the employee's situation, so it is not a recommended approach. Reporting employee foreclosures or bankruptcies based on their disclosed information in an email to the HR Director would violate privacy and confidentiality, as this information should be handled with sensitivity. Therefore, the correct answer is "Do none of the above."Rate this question:
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- 11.
Which of the following helps to explain a real estate short sale? (check all that apply)
- A.
It’s an alternative solution to avoid foreclosure
- B.
It's a situation in which the bank accepts less than the remaining mortgage to pay off the loan
- C.
It's a sale that must close within 45 days
- D.
It's a sale that involves no more than two parties
- E.
It's a sale of a single level home
Correct Answer(s)
A. It’s an alternative solution to avoid foreclosure
B. It's a situation in which the bank accepts less than the remaining mortgage to pay off the loanExplanation
A real estate short sale is an alternative solution to avoid foreclosure where the bank accepts less than the remaining mortgage to pay off the loan. This allows the homeowner to sell the property for less than what is owed on the mortgage, avoiding the negative consequences of foreclosure.Rate this question:
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- 12.
Which of the following applies to the Home Affordable Modification program? (check all that apply)
- A.
Designed to reduce payments to more affordable levels
- B.
Available so that all mortgage lenders can offer refinancing this year
- C.
Only available to Freddie Mac and Fannie Mae-owned mortgages
- D.
Borrowers can be past-due on their mortgage and still qualify
- E.
Borrowers must be current on their mortgage to qualify
Correct Answer(s)
A. Designed to reduce payments to more affordable levels
C. Only available to Freddie Mac and Fannie Mae-owned mortgages
D. Borrowers can be past-due on their mortgage and still qualifyExplanation
The Home Affordable Modification program is designed to reduce payments to more affordable levels, making it easier for borrowers to manage their mortgage payments. It is only available to mortgages owned by Freddie Mac and Fannie Mae, limiting eligibility to borrowers with these specific types of loans. Additionally, borrowers can still qualify for the program even if they are past-due on their mortgage, providing some relief for those who may be struggling to make payments.Rate this question:
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- 13.
Who is NOT a good source of help for a homeowner on the brink of foreclosure?
- A.
Non-profit credit counselors
- B.
Federal Housing Administration and HUD
- C.
The lender
- D.
The national Jumpstart Association
- E.
A professional foreclosure attorney
Correct Answer
D. The national Jumpstart AssociationExplanation
The national Jumpstart Association is not a good source of help for a homeowner on the brink of foreclosure. This is because the national Jumpstart Association is not a recognized organization that specializes in foreclosure assistance or provides any relevant services to homeowners in need. They may not have the expertise or resources to effectively help homeowners navigate the foreclosure process. Therefore, seeking assistance from other options such as non-profit credit counselors, Federal Housing Administration and HUD, the lender, or a professional foreclosure attorney would be more advisable.Rate this question:
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- 14.
Which of the following are common foreclosure misconceptions? (check all that apply)
- A.
When the bank forecloses on my house, they’ll also take all my furniture
- B.
I have to pay off my mortgage to keep my home
- C.
Once my house is sold under foreclosure, my debt is forgiven
- D.
Only deadbeats lose their home to foreclosure
- E.
None of the above
Correct Answer(s)
A. When the bank forecloses on my house, they’ll also take all my furniture
B. I have to pay off my mortgage to keep my home
C. Once my house is sold under foreclosure, my debt is forgiven
D. Only deadbeats lose their home to foreclosureExplanation
The answer choices that are common foreclosure misconceptions are: "When the bank forecloses on my house, they’ll also take all my furniture," "I have to pay off my mortgage to keep my home," "Once my house is sold under foreclosure, my debt is forgiven," and "Only deadbeats lose their home to foreclosure." These statements are misconceptions because they are not true. In foreclosure, the bank typically only takes possession of the house, not the furniture. To keep the home, the homeowner does not necessarily have to pay off the entire mortgage. Even after the house is sold under foreclosure, the homeowner may still be responsible for the remaining debt. Lastly, foreclosure can happen to anyone, not just "deadbeats."Rate this question:
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- 15.
The Relief Refinance Mortgage Program: (check all that apply)
- A.
Is available to all mortgage lenders to offer for refinancing
- B.
Is only available to Freddie Mac and Fannie Mae-owned mortgages
- C.
Will reduce monthly payments by reducing the loan interest rate
- D.
Is only available for owner-occupied homes
- E.
Allows borrowers to refinance with a Loan-to-Value ratio up to 105%
Correct Answer(s)
B. Is only available to Freddie Mac and Fannie Mae-owned mortgages
C. Will reduce monthly payments by reducing the loan interest rate
D. Is only available for owner-occupied homes
E. Allows borrowers to refinance with a Loan-to-Value ratio up to 105%Explanation
The Relief Refinance Mortgage Program is not available to all mortgage lenders but is only available to Freddie Mac and Fannie Mae-owned mortgages. It will reduce monthly payments by reducing the loan interest rate. Additionally, it is only available for owner-occupied homes and allows borrowers to refinance with a Loan-to-Value ratio up to 105%.Rate this question:
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- 16.
When an employee is struggling with mortgage payments, the best thing he/she can do is:
- A.
Borrow money from 401(k)
- B.
Contact his/her mortgage lender to review options
- C.
Nothing. The problem might go away on its own.
- D.
Take money out of child’s savings account
- E.
Call a mortgage rescue company immediately
Correct Answer
B. Contact his/her mortgage lender to review optionsExplanation
When an employee is struggling with mortgage payments, the best thing he/she can do is to contact his/her mortgage lender to review options. This is because the mortgage lender can provide guidance and assistance in finding potential solutions to the problem. They may be able to offer alternatives such as loan modification, refinancing, or temporary forbearance to help the employee manage their mortgage payments more effectively. By reaching out to the mortgage lender, the employee can explore available options and potentially find a solution that suits their financial situation.Rate this question:
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- 17.
Why do employers care if employees lose their homes to foreclosure? (check all that apply)
- A.
It makes the company look bad
- B.
It increases the high cost of Presenteeism
- C.
It may affect the employee’s health
- D.
Companies lose tax benefits if more than 10% of their employees’ homes are foreclosed
- E.
None of the above
Correct Answer(s)
B. It increases the high cost of Presenteeism
C. It may affect the employee’s healthExplanation
Employers care if employees lose their homes to foreclosure because it increases the high cost of Presenteeism. When employees are dealing with financial stress and the potential loss of their homes, their productivity and focus at work can be negatively impacted. This can result in decreased efficiency and effectiveness, ultimately costing the company money. Additionally, the stress and uncertainty of foreclosure can also affect the employee's mental and physical health, leading to potential absences or decreased performance. Therefore, employers have a vested interest in supporting their employees and preventing home foreclosures.Rate this question:
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- 18.
A Money Coach should recommend an employee lose his/her home through foreclosure only if which of the following is true?
- A.
The employee can’t make the mortgage payments
- B.
The mortgage is more than the home is worth
- C.
The employee just lost his/her job
- D.
The house isn’t big enough for the employee's growing family
- E.
None of the above. A Money Coach should never make recommendations or give advice.
Correct Answer
E. None of the above. A Money Coach should never make recommendations or give advice. -
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Jun 09, 2023Quiz Edited by
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Jun 19, 2009Quiz Created by
Alice Whinnery
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