Chapter 17 Flashcards
What is the recommended number of lenders that a broker should submit to?
Select one:
a. One
b. Four
c. Three
d. Two
Correct Answer: One
Rationale: One: You should only submit an application to one lender. While this is not a legal requirement it is a best practice.
Relevant section(s) of the textbook: 17 Introduction
The correct answer is: One
Newton Connectivity Systems is an example of:
Select one:
a. Credit bureau
b. AVM
c. Origination software
d. Appraisal
Correct Answer: Origination software
Rationale: Applications may be submitted to a lender in any format that the lender accepts. The most common format is via origination software acceptable to the lender. The brokerage generally decides on the software used by its agents and brokers and provides training on the software they use.
Relevant section(s) of the textbook: 17.1 Submitting the Application
The correct answer is: Origination software
This term refers to an addendum to a mortgage commitment that outlines additional terms and conditions of a mortgage approval:
Select one:
a. Funding Ratio
b. Schedule
c. Risks
d. Conditions
Correct Answer: Schedule
Rationale: Schedule: An addendum to a mortgage commitment that outlines additional terms and conditions of a mortgage approval.
Relevant section(s) of the textbook: 17.5 Key Terms and Definitions
The correct answer is: Schedule
This term refers to an individual employed by a lender who reviews mortgage applications to determine if they meet the lender’s lending guidelines:
Select one:
a. Mortgage appraiser
b. Underwriter
c. Brokerage agent
d. MBLAA agent
Correct Answer: Underwriter
Rationale: Underwriter: An individual employed by a lender who reviews mortgage applications to determine if they meet the lender’s lending guidelines, and who commonly provides a commitment letter when they are deemed to meet those guidelines.
Relevant section(s) of the textbook: 17.5 Key Terms and Definitions
The correct answer is: Underwriter
If an application is declined, the first step the agent should take is to:
Select one:
a. Contact the underwriter
b. Ask for help from a broker
c. Submit to another lender
d. Tell the borrower
Correct Answer: Contact the underwriter
Rationale: If an application is declined by the lender, the mortgage agent should contact the underwriter to gain an understanding of why it was declined. In most cases, an application should not be declined since the mortgage agent has researched the lender and determined that the application suits the lender’s guidelines. If this is not the case, the mortgage agent must determine if they misinterpreted the guidelines or if the underwriter found something in the application that they did not think met those guidelines.
Relevant section(s) of the textbook: 17.4 A Declined Application
The correct answer is: Contact the underwriter
This term refers to the terms of a lender’s commitment that must be fulfilled before the mortgage will be funded:
Select one:
a. Conditions
b. Funding Ratio
c. Schedule
d. Risks
Correct Answer: Conditions
Rationale: Conditions: Terms of a lender’s commitment that must be fulfilled before the mortgage will be funded.
Relevant section(s) of the textbook: 17.3 The Commitment Letter
The correct answer is: Conditions
This term refers to the ratio of applications submitted to a lender compared to the number of funding’s:
Select one:
a. Risks
b. Conditions
c. Funding Ratio
d. Schedule
Correct Answer: Funding Ratio
Rationale: Funding Ratio: The ratio of applications submitted to a lender compared to the number of funding’s.
Relevant section(s) of the textbook: 17.1 Introduction
The correct answer is: Funding Ratio
Which of the following is NOT an area that the mortgage agent must review and provide the underwriter with explanatory notes?
Select one:
a. Employment
b. Equity
c. Property
d. Credit
Correct Answer: Equity
Rationale: Equity is NOT an area that the mortgage agent must review, whereas all other options are relevant.
Relevant section(s) of the textbook: 17.3 The Commitment Letter
The correct answer is: Equity
Which of the following is NOT on the list of information commonly found in a commitment letter?
Select one:
a. Applicants’ names
b. Mortgage amount
c. Payment frequency
d. Applicants’ bank information
Correct Answer: Applicants’ bank information
Rationale: Applicants’ bank information is NOT on the list of information commonly found in a commitment letter, whereas all other options are relevant.
Relevant section(s) of the textbook: 17.3 The Commitment Letter
The correct answer is: Applicants’ bank information
This agent may submit applications to a private lender:
Select one:
a. Level 2 agent
b. Principal Broker
c. Level 1 agent
d. Broker
Correct Answer: Level 2 agent
Rationale: The Level 2 agent or mortgage broker will submit an application, credit report, Investor/Lender Disclosure (Form 1, and any other disclosure forms required, based on the specific type of transaction) and any supporting documents to the potential private lender
Relevant section(s) of the textbook: 17.5 Key Terms and Definitions
The correct answer is: Level 2 agent
