Chapter 18: Mortgage Brokerages

Question 1

A company, individual or institution that originates mortgages. Mortgage bankers use their own funds, or funds borrowed from a warehouse lender, to fund mortgages.

Answer 1

Mortgage Banker

Question 2

An intermediary who brings mortgage borrowers and mortgage lenders together, but does not use its own funds to originate mortgages. A mortgage broker gathers paperwork from a borrower, and passes that paperwork along to a mortgage lender for underwriting and approval. The mortgage funds are then lent in the name of the mortgage lender. A mortgage broker collects an origination fee and/or yield spread premium from the lender as compensation for its services.

Answer 2

Mortgage Broker

Question 3

A banking department form required when a person is acting as a mortgage broker and a real estate broker in the same transaction.

Answer 3

Mortgage Broker Dual Agency Disclosure Form

Question 4

A written notice from the bank or other lending institution saying it will advance mortgage funds in a specified amount to enable a buyer to purchase a house.

Answer 4

Mortgage Commitment

Question 7

An evaluation of a potential borrower by a lender that determines whether the borrower qualifies for a loan from the lender, or the maximum amount that the lender would be willing to lend.

Answer 7

Pre-Approval

Question 8

A payment to a mortgage broker by a lender.

Answer 8

Lender Rebate

Question 9

A loan that fails to meet bank criteria for funding.

Answer 9

Non-Conforming Loan

Question 10

An agreement between a borrower and a lender that allows the borrower to lock in the interest rate on a mortgage over a specified time period at the prevailing market interest rate.

Answer 10

Rate Lock

Question 11

The process by which a lender decides whether a potential creditor is creditworthy and should receive a loan.

Answer 11

Underwriting

Question 12

A process whereby a loan officer takes information from a borrower and makes a tentative assessment of how much the lending institution is willing to lend them.

Answer 12

Pre-Qualification

Question 13

A form used between mortgage brokers or mortgage bankers and a home buyer that provides certain disclosures prior to the application of a mortgage.

Answer 13

Pre-application and Fee Agreement