CMPS CMPS Mortgage Insurance and Protection Products Questions and Answers 2

Question 1

What is the VA Funding Fee, and which group of veterans is exempt from paying it?

Accepted Answer

A one-time fee that replaces PMI on VA loans; veterans receiving VA disability compensation are exempt

Answer

A fee for VA appraisals; all veterans pay it

Answer

An annual insurance premium charged monthly; National Guard members are exempt

Answer

A processing fee; first-time homebuyers are exempt

Question 2

What is the USDA annual guarantee fee, and how does it compare to FHA's annual MIP in terms of cancellability?

Accepted Answer

USDA's annual fee (currently 0.35%) is lower than FHA's and does cancel when LTV reaches 80%

Answer

USDA's fee is higher than FHA and also permanent

Answer

USDA has no annual fee, only an upfront guarantee fee

Answer

Both USDA and FHA fees are identical and permanent

Question 3

Which of the following best describes 'mortgage protection insurance' (MPI) as distinct from PMI?

Accepted Answer

MPI is a voluntary life/disability insurance policy that pays off or reduces the mortgage balance if the borrower dies or becomes disabled

Answer

MPI is government-mandated on all high-LTV loans

Answer

MPI is the same product as PMI but marketed to self-employed borrowers

Answer

MPI covers property damage that homeowner's insurance excludes

Question 4

A borrower with a conventional loan reaches 20% equity through home appreciation. Can they request PMI cancellation based on the new appraised value?

Accepted Answer

Yes — borrowers may request cancellation based on current value if the loan is at least 2 years old (80% LTV) or 5 years old (any LTV), subject to lender guidelines

Answer

No — cancellation is only based on original purchase price

Answer

Yes — appreciation-based cancellation is automatic and requires no action

Answer

No — only FHA loans allow equity-based MIP removal

Question 5

What is 'split-premium PMI,' and when might a CMPS advisor recommend it?

Accepted Answer

A PMI structure where part of the premium is paid upfront at closing and the remainder is paid monthly, reducing the monthly payment compared to standard BPMI

Answer

PMI split equally between borrower and lender with no rate impact

Answer

PMI that splits between two properties simultaneously

Answer

A form of LPMI available only on jumbo loans

Question 6

Under RESPA, which of the following disclosures must lenders provide regarding PMI?

Accepted Answer

For loans subject to the HPA, lenders must provide written disclosure of PMI cancellation and termination rights at loan consummation

Answer

A PMI cancellation schedule must be provided at application on all loan types

Answer

PMI disclosure is optional and only required if the borrower requests it

Answer

RESPA requires PMI disclosure only on FHA loans