Chapter 6 Flashcards
This term refers to a printout of all of the mortgage payments during the term:
Select one:
a. Origination Software
b. Appraisal
c. Commitment Letter
d. Amortization Schedule
Correct Answer: Amortization Schedule
Rationale: An Amortization Schedule is a printout of all of the mortgage payments during the term, including the amount of interest and principal per payment and the outstanding mortgage balance after each payment is made.
Relevant section(s) of the textbook: 6.4 The Steps in a Brokered Transaction
The correct answer is: Amortization Schedule
This person has a duty to the agent to:
1. indemnify the agent, and
2.pay the agent, for example, a commission or fee
Select one:
a. Agent
b. Principal
c. Brokerage
d. Broker
Correct Answer: Principal
Rationale: Principal’s duties to the agent include 1. A duty to indemnify the agent, and 2. A duty to pay the agent, for example, a commission or fee Relevant section(s) of the textbook: 6.2 The Role of the Mortgage Agent as Advisor
The correct answer is: Principal
This term refers to a practicing professional who assesses financial goals with respect to real estate financing and acts as an intermediary with the appropriate lending source.
Select one:
a. Mortgage Broker/Agent
b. Lender
c. Client
d. Borrower
Correct Answer: Mortgage Broker/Agent
Rationale: The Mortgage Broker/Agent is a practicing professional who assesses a borrower’s financial goals with respect to real estate financing and after detailed analysis provides solutions to meet those goals by acting as an intermediary with the appropriate lending source.
Relevant section(s) of the textbook: 6.1 Who is the Client?
The correct answer is: Mortgage Broker/Agent
This term refers to a program that the mortgage agent uses to input the borrower’s application:
Select one:
a. Brokerage Report
b. Origination Software
c. Amortization Schedule
d. Appraisal
Correct Answer: Origination Software
Rationale: Origination Software is the computer program that the mortgage agent uses to input the borrower’s application. This software is designed to calculate required ratios, pull a credit bureau report, electronically submit the application to a lender, as well as provide other functions for the mortgage agent.
Relevant section(s) of the textbook: 6.4 The Steps in a Brokered Transaction
The correct answer is: Origination Software
This term refers to the step in which the agent completes the borrower’s application and determines the needs of the borrower:
Select one:
a. Appraisal
b. Brokerage
c. Attracting a Client
d. The Initial Consultation
Correct Answer: The Initial Consultation
Rationale: The Initial Consultation is the step in which the agent completes the borrower’s application and determines the needs of the borrower. At this stage the agent has not completed a detailed analysis to determine the options available to the borrower but has a firm understanding of what the borrower wishes to accomplish.
Relevant section(s) of the textbook: 6.4 The Steps in a Brokered Transaction
The correct answer is: The Initial Consultation
This term refers to a document illustrating an offer by a lender to a borrower, including the terms and conditions of that offer:
Select one:
a. Commitment Letter
b. Amortization Schedule
c. Origination Software
d. Appraisal
Correct Answer: Commitment Letter
Rationale: A Commitment Letter is a document illustrating an offer by a lender to a borrower, including the terms and conditions of that offer.
Relevant section(s) of the textbook: 6.4 Key Terms and Definitions
The correct answer is: Commitment Letter
Which of the following is NOT a borrower expectation of the mortgage agent?
Select one:
a. Act in the borrower’s best interests
b. Provide funding to the borrower
c. Make appropriate recommendations based on the borrower’s needs
d. Completely analyze the borrower’s needs
Correct Answer: Provide funding to the borrower
Rationale: Provide funding to the borrower is not a borrower expectation, whereas all the other options are accurate.
Relevant section(s) of the textbook: 6.2 The Role of the Mortgage Agent as Advisor
The correct answer is: Provide funding to the borrower
In common law, this term refers to the relationship that exists when one person or party engages another to act for them.
Select one:
a. Agent
b. Agency
c. Tort
d. Principal
Correct Answer: Agency
Rationale: In the common law of agency, an agent is an individual who has the legal authority to act in place of another, referred to as the principal. While lenders and borrowers have certain expectations of the mortgage agent, there are also legal responsibilities that may exist.
Relevant section(s) of the textbook: 6.2 The Role of the Mortgage Agent as Advisor
The correct answer is: Agency
This term refers to the criteria used to assess an application by a lender.
Select one:
a. Commitment
b. Underwriter
c. 5 C’s of credit
d. Appraisal
Correct Answer: 5 C’s of credit
Rationale: This analysis is generally designed to assess the following criteria, often referred to as the 5 C’s of Credit. It’s of interest to note that these are not formal underwriting criteria, but what are typically regarded as the general areas that a lender will consider when making a decision to lend.
Relevant section(s) of the textbook: 6.3 How a Mortgage Agent Analyzes/Underwrites
The correct answer is: 5 C’s of credit
Which of the following is NOT a step in a brokered transaction process?
Select one:
a. Choosing a lender
b. File creation and management
c. Attracting a client
d. Offering personal loans
Correct Answer: Offering personal loans
Rationale: Offering personal loans is not a step in a brokered transaction, whereas all the other options are accurate.
Relevant section(s) of the textbook: 6.4 The Steps in a Brokered Transaction
The correct answer is: Offering personal loans
