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HUD Housing Counselor Certification Practice
Questions With Complete Solution Rated (A+)
Quiz :What is the maximum percent of area median income allowable for a
household to qualify for a Housing Choice Voucher? - Answer :50%
Quiz :Which is the maximum recommended housing ratio for renting an
apartment? - Answer :30%
Quiz :Eligibility requirements for down-payment assistance programs include
which factors? - Answer :Income, home-buyer education, purchase price
Quiz :The client is considering an FHA mortgage
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75%
Quiz :If the client was denied a mortgage loan and the lender told him to come
back after his divorce had been final for three years, what is the best advice for
the housing counselor to provide to the client to report a violation to ECOA? Answer :Contact the Federal Trade Commission as the lender's action might
violate the Equal Credit Opportunity Act
Quiz :A question from a lender on the client's Medical History would be
inappropriate or appropriate? - Answer :Inappropriate
Quiz :Who is responsible for educating home-buyers about their rights? Answer :Housing Counselor
Quiz :In order to minimize the impact on the client's credit score, what is the
maximum time frame within which the client should apply for pre-approval
from multiple lenders? - Answer :A 30-day period
Quiz :What are the responsibilities of a home inspector? - Answer :Examine
mechanical systems, Evaluate the condition of a home, Identify items to be
repaired or replaced
Quiz :Which is the best reason that a housing counselor would suggest that a
client speak to three to five different lenders? - Answer :To compare loan
estimates

Quiz :Which is the best advice that a housing counselor can give the client to
protect against identity theft? - Answer :Review credit report at least once per
year
Quiz :The client tells the lender that he is expecting a raise soon
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What is the maximum mortgage payment (rounded to the nearest
dollar) for which this client would qualify using a standard conventional loan? Answer :$1,065
NOTE: The maximum front-end ratio for a standard conventional loan is 28%,
and the back-end ratio is 36%
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The back-end ratio is
calculated as 36% of the
client's monthly income of $4,167 minus the client's monthly debt of $435,
which equals $1,065
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Quiz :Which is the maximum debt-to-income ratio allowable for an FHA loan? Answer :43%
Quiz :Which is the maximum debt-to-income ratio allowable for an FHA
Energy Efficiency Mortgage loan? - Answer :45%
Quiz :The client's gross monthly income is $4167 and the monthly debts are
$435
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If the client seeks an FHA Energy Efficient Mortgage (EEM) loan, what is
the maximum housing payment for which he can qualify (rounded to the
nearest dollar)? - Answer :$1,292
Quiz :On which factor is a borrower's annual mortgage insurance premium
(MIP) based? - Answer :Current principal balance
NOTE: The annual mortgage insurance premium (MIP) is based on the unpaid
principal balance of the loan
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Credit
scores do not affect MIP but might affect PMI
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Which should the housing counselor
recommend to help the client begin
planning for a home purchase?
A- Continue to track bill payments only
B- Track income only
C- Track all income and expenses
D- Track savings deposits and expenses - Answer :C- Track all income and
expenses
Quiz :How should a client apply for the Housing Choice Voucher Program? Answer :Contact the local Public Housing Authority
Quiz :Which website provides information on programs to assist home-buyers
with down payment assistance? - Answer :HUD
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Which Act is this adverse action violating,
and where should the client report this action to? - Answer :Report the action

to the Federal Trade Commission, it is a violation of the Equal Credit
Opportunity Act
Quiz :If the client submits a loan application, which document should she
receive within three business days? - Answer :Loan Estimate
Quiz :What is a pre-approval from a lender? - Answer :When the lender
commits to lend a fixed amount based on a review of the client's application
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She has been working part-time at an ice cream parlor for the past few
summers to save for her first home
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In the next three
months, the client would like to buy a single-family home near a good school
for less than $150,000
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What is the most likely explanation for these
fees? Choose one:
A- Predatory lending practices
B- Subprime mortgage terms
C- Regional lending considerations
D- Variation in lending practices - Answer :A- Predatory lending practices
Quiz :The client thinks her cost of living is going to be the same because her
mortgage payment and her rental payment are comparable
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She has been working part-time at an ice cream parlor for the past few
summers to save for her first home
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In the next three
months, the client would like to buy a single-family home near a good school
for less than $150,000
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Prices in the area
where she would like to live are around $450,000
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She
typically saves $500 per month, but when she has unexpected expenses she is
unable to save
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A- Earned Income Tax Credit
B- Child and Dependent Care Tax Credit
C- Energy tax credit - Answer :B- Child and Dependent Care Tax Credit

Quiz :The client currently keeps the $45,000 remaining from the life insurance
settlement in a regular checking
account
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Which
action should the housing counselor suggest to this client?
A- Move the funds into a mutual fund
B- Move funds to a large purchase savings account with limited accessibility
C- Leave the money in her current checking account for easy access
D- Move funds into a long-term Certificate of Deposit - Answer :Move funds to
a large purchase savings account with limited accessibility
Quiz :The client wants to move her family to a lower-priced rental unit to save
money for a home, but is struggling with the upfront fees required to move to
a new apartment complex
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Which is the
best advice for the housing counselor to provide?
A- Discuss a tenancy-at-sufferance agreement with the current landlord
B- Stay in her current unit until the landlord evicts her
C- Find a seller who will allow her to move in before closing
D- Contact local Public Housing Agencies - Answer :A- Discuss a tenancy-atsufferance agreement with the current landlord

Quiz :Which tactic would be most effective for the client to encourage a
positive landlord-tenant experience during a tenant initiated early lease
termination?
A- Stop paying rent immediately
B- Request return of the security deposit
C- Leave furniture for an incoming tenant
D- Communicate well with the landlord - Answer :D- Communicate well with
the landlord
Quiz :Which additional information would the housing counselor need to
prepare the action plan for this client?
A- Documentation of life insurance payout
B- Client's current lease agreement
C- Documentation of household expenses
D- Listings for properties the client is interested in purchasing - Answer
:Documentation of household expenses
Quiz :Which is the best recommendation the housing counselor should give
this client to help improve her credit score?
A- Set up automatic credit card and loan payments to ensure on time payment
B- Apply for a loan to consolidate the credit card and auto loan balances
C- Apply for a credit card with a lower interest rate and transfer the balance of
the current card
D- Pay more than the minimum payment each month to reduce the credit card
balance - Answer :D- Pay more than the minimum payment each month to
reduce the credit card balance
Quiz :Which factor would most likely impact the client's housing affordability
in the future?
A- A reduction in income when the survivor benefit runs out when children
turn 18
B- The need for a second car when the children start to drive
C- Selecting a 30-year fixed rate mortgage versus a 15-year fixed rate mortgage
D- The cost of home repairs and maintenance - Answer :A- A reduction in
income when the survivor benefit runs out when children turn 18

Quiz :The client currently pays $2,050 in rent, though her mortgage payment
could be higher
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The maximum back-end ratio for FHA is
43%
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Forty-three percent of $6,400 is $2,752
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Reference: Module 2
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Buying
Page Number 21 to 24
Quiz :Which is the down payment required if the client purchases a $375,000
home with an FHA mortgage? - Answer :$13,125
NOTE: The down payment would be 3
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035 equals $13,125)
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The mortgage required a minimum credit score of 640, 3% down
payment and a 35% front-end ratio and a 43% back-end ratio
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During the
intake process, she was asked about her children and her responsibilities as a
mot - Answer :Fair Housing Act
NOTE: The Fair Housing Act prohibits housing discrimination and protects
seven characteristics: race, religion, color, national origin, familial status,
disability, and sex
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Quiz :The client has recently replaced her sewer lines
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B- The new sewer lines are covered by a warranty
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D- The client's contents insura - Answer :C- Flood insurance policies do not
cover water that comes from inside a home
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Which claim is most likely covered under
her homeowners' insurance?
A- A claim to repair damage to the home
B- A claim for medical payments of the client's child only
C- A claim for medical payments of the friend only
D- A claim for medical payments for both children - Answer :C- A claim for
medical payments of the friend only
Quiz :The client finally leaves her home and moves to a rental and is
concerned about being displaced if the apartment becomes unlivable
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gov to learn about home energy improvement projects
D- Hire a home energy efficiency inspector - Answer :A- Explore an FHA Energy
Efficiency loan
Quiz :The client later purchases a home that was built in 1935
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The
recommendation is to replace the pipes with PVC, with an estimated cost of
$6,000
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The client also mentioned the
huge cost in heating bills
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Which
finance option should the housing counselor recommend?
A- Conventional Mortgage
B- Second Mortgage
C- FHA 203k
D- Home Equity Line of Credit - Answer :C- FHA 203k
NOTE: An FHA 203k loan is based on the future value of the property after
repairs and will provide the funds for home improvements beyond the current
equity in the house
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B- Real estate agents perform the home inspection
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D- Real estate agents explain homeowner's insurance to the buyer
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Quiz :Which document should the client expect to sign to begin the home sale
process?
A- Uniform Residential Loan Application
B- Upfront commission arrangement
C- Listing agreement
D- Home inspection contract - Answer :C- Listing agreement
Quiz :The client decides to sell her home and wants to complete various home
repairs before listing the property for sale
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She is three months
past due on her mortgage and is
concerned about losing her home
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She wants to know what her options are
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Her debt obligations
total is $375
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Which characteristic of this client's situat - Answer :The client is eligible for
another FHA loss mitigation option
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The FHA-HAMP Loan
Modification Program is only available to clients who are not eligible for any
other loss mitigation program
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B- The forgiven mortgage deficiency may be treated as taxable income
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D- The mortgage company may sue the homeowner for the deficiency amount
owed
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NOTE: Most short sales will have a deficiency, but in most cases the lender will
not require payment of the remaining balance and can request that the option
for a deficiency judgment be removed
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Quiz :The client is afraid her servicer might begin foreclosure proceedings
immediately and force her out of her home
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B- A mortgage servicer cannot make a first notice for foreclosure until a
borrower is more than 120 days
delinquent
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D- The client is not yet in default
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Quiz :If the client decides to leave the home, which option would most likely
require the least amount of time?
A- Deed-in-lieu
B- Foreclosure
C- Short sale
D- Pre-foreclosure sale - Answer :A- Deed-in-lieu
If the servicer cooperates, a deed-in-lieu will take the least amount of time
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A short sale is "short" on the principal
balance of the loan, though the timeline for completion is typically not very
short
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Reference: Module 5
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She is considering filing for bankruptcy but wants to keep her home
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Based on the
information provided, if the client had an FHA-insured mortgage which loss
mitigation option
would her servicer likely suggest first? - Answer :Special Forbearance Unemployment Agreement
Quiz :The client and her housing counselor request an FHA Special
Forbearance-Unemployment Agreement from the client's servicer
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B- The client will have to show surplus income over the minimum limit
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D- The client will have to successfully complete a Trial Payment Plan
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Which information should the housing counselor provide?
A- The client should stop making mortgage payments and save that money for
transition
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C- The client's state and/or servicer may have programs to assist with transit Answer :C- The client's state and/or servicer may have programs to assist with
transition cos
Quiz :The client finds out her landlord has been granted a writ of possession
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By the time the client receives a writ of
possession, she would have already received a pay or quit notice and a notice
to vacate
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Quiz :Which document must be filed and issued to the tenant before the
landlord can forcibly evict or change locks? - Answer :Writ of possession
Quiz :Which term most accurately describes a loan that is three months late in
payment?
A- Imminent default
B- Foreclosure
C- Delinquent
D- Default - Answer :D- Default
Quiz :Where is this client in the foreclosure timeline if she lives in a nonjudicial state and is 3 months behind in her mortgage?
A- The client is delinquent
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C- The client is in foreclosure
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- Answer :B- The client is in default
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Notice of
intent or default cannot be filed as early as 45 days
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Quiz :Which additional information does the housing counselor need to help
the client determine her retention options?
A- Notice of foreclosure
B- Mortgage type
C- Total debt balance
D- Emergency budget - Answer :B- Mortgage type
Quiz :The clients, a married couple, have three credit cards with high balances
and make monthly payments on a cash advance loan
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Which action
would be most likely to have the greatest positive impact on the clients' credit
score?
A- Opening a new secured credit card
B- Paying down their credit card balances
C- Paying off and closing one c - Answer :Paying down their credit card
balances
Quiz :Which is an eligibility factor for the Earned Income Tax Credit?
A- Having a qualifying child

B- Pursuing post-secondary education
C- Filing as head of household
D- Receiving wages - Answer :D- Receiving wages
Quiz :The clients obtained the mortgage in 2006 from a broker who told them
that they did not need any proof of income, savings, or assets
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S
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Which should the
counselor advise the clients to do after being rejected for a mortgage loan?
A- File bankruptcy to wipe away their debt
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C- Pay down debt and keep balances low moving forward
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- Answer :C- Pay down
debt and keep balances low moving forward
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For which
mortgage product did they most likely qualify?
A- VA
B- Conventional
C- USDA
D- FHA - Answer :D- FHA
NOTE: FHA is the only mortgage loan product that allows family assistance
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Reference: Module 2
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Which is the best advice the counselor can give?
A- Contact the Consumer Finance Protection Bureau to see if the company can
be trusted
B- Shop around for the lowest price to obtain a loan modification
C- Contact the Better Business Bureau to see if the company can be trusted
D- Report the company to the Federal Trade Commission b - Answer :DReport the company to the Federal Trade Commission because no company
can guarantee loan modifications

Quiz :If the clients are worried about the cost of homeowners insurance for
their new home, which would most likely qualify them for discounts from
insurance agents?
A- Installing deadbolts for security
B- Inviting the fire department to inspect the home
C- Being close to the local police station
D- Keeping a firearm in the home for protection - Answer :A- Installing
deadbolts for security
Quiz :The clients paid below market price for their home and have some
equity available
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Because they just closed on their mortgage, they do not have a lot of funds
available
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Which would be the best advice the
counselor could give on that topic?
A- Set an evacuation location for family members in school or daycare
B- Create a plan to communicate with the household
C- Create a plan to evacuate the vehicles from the property
D- Prepare for every possible emergency and disaster - Answer :B- Create a
plan to communicate with the household
Quiz :Which is an appropriate feature of a safe room? - Answer :Few or no
windows
NOTE: A safe room should have few-to-no windows, as that makes it less likely
that safety will be compromised
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The
size of a room has little bearing on whether it is an appropriate safe room
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After the wife exhausts all her maternity benefits,
their income becomes dramatically reduced and fail to make several mortgage
payments
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Now they've received a letter threatening foreclo - Answer :D- The loan
originated less than 12 months ago
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Which benefit
of working with a housing counselor might address this complaint?
A- Counselors are allowed to give more regular updates on a client's situation
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C- Counselors have a better rapport with servicers than borrowers
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Quiz :Which expense is generally considered to be a "want" as opposed to a
"need"?
A- Prescription drugs
B- Mortgage insurance
C- Car insurance
D- Cable - Answer :D- Cable
Quiz :The client earns $3,000 in wages per month and will receive $700 per
month in child support, once an agreement is finalized, has $2,000 in savings
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5% down payment, the average price of homes in the area is
$100,000
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She had a Chapter 7
bankruptcy discharged successfully 18 months ago, and - Answer :ABankruptcy
NOTE: The bankruptcy is the most likely reason for denial, because it raises
concerns with landlords
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Prior rental history was positive
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Because the auto loan
and student loans have been paid, she needs to show a successful payment
history after the bankruptcy
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A credit repair company
cannot resolve the negative impact of the bankruptcy and may be a scam
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Renting provides more
flexibility to move; the landlord is responsible for maintenance; and many
apartments offer more amenities, including a pool and recreation room
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1 Renting vs
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Which federal law protects the client in this situation?
A- Fair and Accurate Credit Transactions Act (FACTA)
B- Fair Credit Billing Act (FCBA)
C- Equal Credit Opportunity Act (ECOA)
D- Fair Credit Reporting Act (FCRA) - Answer :D- Fair Credit Reporting Act
(FCRA)
NOTE: The Fair Credit Reporting Act allows consumers to dispute inaccurate
information on their credit reports
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Reference: Module 1
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Housing counselors are expected to provide advice
on what might qualify as a reasonable accommodation and where to find
affordable housing and rental assistance
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2 Eviction
Page Number 13 to 13
Quiz :he client earns $3,000 in wages per month and will receive $700 per
month in child support, once an agreement is finalized, has $2,000 in savings
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5% down payment, the average price of homes in the area is
$100,000
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She had a Chapter 7
bankruptcy discharged successfully 18 months ago, and s - Answer :D- The
client's bankruptcy was discharged 18 months ago
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Typically, in order to qualify for a mortgage, the client's Chapter 7 bankruptcy
must have been discharged for at least two years, and she needs to save
enough money for down payment and closing costs
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There is no indication that it
will take longer than eight months after the divorce for the child support to be
finalized, so it can be counted as income
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4 Protecting Assets
Page Number 11 to 18
Quiz :How much should a housing counselor recommend the client save in an
emergency fund?
A- 2% of net income
B- 10% of net income
C- 1 to 2 months of living expenses

D- 3 to 6 months of living expenses - Answer :D- 3 to 6 months of living
expenses
Quiz :A client who is a single mother of two young children meets with a
housing counselor to create a spending
plan that helps her manage her finances better and improve her credit score
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She works 40 hours per week
and earns $12 per hour
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She has
one secured credit card and $5,000 of bad debt, which has been in collection
for three ye - Answer :$624 per month
NOTE: An affordable rental payment should be no higher than 30% of client's
gross income
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She has been employed at her job for two years
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She does not receive child support and her monthly
income barely covers her monthly expenses, so she is unable to save
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Given that the judgement was for a previous eviction, paying it
off could also help the client's chances of getting into a better rental
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Also, the client's current employer indicated the possibility of a
promotion; therefore, looking for a new job may

not be a good step
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Reference: Module 1
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Which costs will prevent this
client from purchasing a home?
A- Property maintenance expenses
B- Principal, interest, taxes, insurance, and association fees (PITIA)
C- Pet deposit for pet owners
D- Closing costs - Answer :D- Closing costs
Closing costs average between 3% to 4% of the home purchase price based on
a variety of factors and may be higher or lower
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It also helps the
client understand the importance of
identifying all costs and not just comparing monthly payment amounts
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The property maintenance
expense will apply only after she purchases the home
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1 Renting vs
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Which law protects the client from this action?
A- Fair Credit Reporting Act (FCRA)
B- Fair Credit Billing Act (FCBA)
C- Fair Labor Standards Act (FLSA)
D- Fair and Accurate Credit Transactions Act (FACTA) - Answer :A- Fair Credit
Reporting Act (FCRA)
NOTE: An employer may not access an employee's credit file without his or her
consent per the
Fair Credit Reporting Act
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The Fair Labor
Standards Act protects consumers with respect to other workplace issues but
does not address accessing a credit report without consent
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2 Credit
Quiz :Which is the next step the client should take if she calls her credit card
company to dispute a charge, and the company refuses to resolve the issue
because the charge was made outside of her state?
A- Send a letter to the credit card company disputing the charge
B- Ignore the charge
C- Pay the charge
D- File a complaint with the Consumer Finance Protection Bureau (CFPB) Answer :D- File a complaint with the Consumer Finance Protection Bureau
(CFPB)
NOTE: Under the Fair Credit Billing Act, credit card companies must respond to
a written dispute within 30 days of receiving it, so the client's next step is to
send a letter to the credit card company to dispute the charge within 60 days
of receipt of the erroneous credit card statement
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Paying the charge would not be to her financial
benefit, and ignoring the charge could affect her credit
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2 Credit
Quiz :Which class under the Fair Housing Act provides protection for the client
if her landlord tells her she needs to move to a smaller apartment, on a lower
level, because her neighbors have complained about her children?
A- Familial status
B- There is no fair housing violation
C- Sex
D- National origin - Answer :A- Familial status
Quiz :Which advice should the counselor provide to the client, who faces
potential eviction from
unpaid rent?
A- Prepare for eviction by packing her things and provide a list of emergency
shelters
B- Seek legal aid services so her rental payments can be held in escrow until
the repairs are made

C- Seek legal aid services to counter sue the landlord for not making repairs to
the dishwasher
D- Pay the back-owed rent and provide a list of emergency rental assistance
programs - Answer :D- Pay the back-owed rent and provide a list of emergency
rental assistance programs
Quiz :The client announces that she plans to file for bankruptcy
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B- Wait several years for the bad debt to be removed from the credit report
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D- Adjust the budget to find residual income, then negotiate settlements with
creditors one at a time
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Quiz :A Korean man and his daughter would like to rent an apartment
...
After
finding an apartment close to his daughter's school that suits
his needs, he submits an application and is approved to rent the unit
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The landlord claims that
the man and his daughter are misrepresenting their identities; the landlord
conten - Answer :C- The client's use of a wheelchair
If a fair housing violation occurred in this circumstance, it is most likely
because of the client's use of a wheelchair, as that was the focus of the
landlord's reasoning for claiming that the client was not who he said he was
...
While the man's national origin and his
familial status as a single father are both protected characteristics under fair
housing laws, there is no evidence given that these were the reasons the
landlord refused to rent to the client
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Reference: Module 3
...
He was able to find another unit to rent but the experience is still
embarrassing to him and he worries that the landlord will do it to someone
else
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Unfortunately, fair housing complaints are only valid if they are filed within a
year of the alleged violation
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He no longer has any
recourse to pursue with regard to the violation
...
Legal actions such as lawsuits are not within the professional
expertise of housing counselors and should be handled with referrals
...
2 Violations & Complaints
Quiz :If the client had filed a complaint 10 months after the incident, and HUD
concluded that the landlord violated fair housing laws, which is the most likely
result of the complaint?
A- HUD seeks a conciliation agreement with the client and the landlord
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C- HUD authorizes civil action for relief on behalf of the victim
...
- Answer :AHUD seeks a conciliation agreement with the client and the landlord
...
If the intent of the client is to
inform the landlord of their mistake and to ensure that it does not happen
again, then a
conciliation agreement will achieve both of those ends; it should be noted that
these agreements are voluntary for both claimants and respondents
...
HUD does not have the authority to
have anyone arrested or to revoke their ability to manage their property
...
2 Violations & Complaints
Quiz :What is the maximum number of days after filing a complaint that HUD
must conclude an investigation? - Answer :100
Quiz :During a party at the client's apartment, a friend stumbles over a hoodie
and falls down the stairs, crashing into the client
...
Which feature of renter's insurance
is most relevant to this incident?
A- Content coverage could replace the client's broken cell phone
...

C- Loss of use coverage could pay for a hotel room while the police investig Answer :B- Personal liability coverage could protect the client from related
legal action
...
The accident likely will not be considered a qualifying peril to
replace the client's phone, and it is unlikely the incident would put the client
out of his
apartment temporarily
...

Reference: Module 6

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