Chapter 7: Underwriting, Closing and the Secondary Market Flashcards
^^^Which of the following is another quick method to determine appraisals and uses uses annual gross incomethat includes the rent and any other generated income including money from Vending machines, washers and dryers, and parking? A. Cost approach B. Comparison Approach C. Gross Income Multiplier (GIM) D. Gross Rent Multiplier (GRM)
Answer C
The GIM is very similar to the GRM except that it uses annual gross income that includes the rent and any other generated income including money from vending machines, washers and dryers, and parking.
Market Value / Annual Gross Income = GIM
Which of the following type of FHA loan is a fixed rate loan? A. 203B B. 251 C. 203K D. 204C
Answer A
203b-fixed rate- 10 to 30 yrs
251-ARM
203k- purchase and rehab (construction)
234c-condominiums
The title company considers unpaid property taxes to be an: A. Encroachment B. Encumbrance C. Easement D. Engress
Answer B
An appraisal must be re-certified if it is older than: A. 1 month B. 4 months C. 6 months D. 12 months
Answer B
What might the results be for a loan officer, if within two months of granting a refinance loan, the borrowers went to another lender who offered a lower rate and refinanced again?
- The MLO’s company may have to pay a premium recovery.
- The wholesale broker agreement may automatically be cancelled.
- The initial investor could sue for interest not earned.
- The MLO could sue the borrowers for unethical behavior.
The MLO’s company may have to pay a premium recovery.
The borrowers wanted to expedite the home-buying process so they got a pre-approval. Which statement best describes their situation?
- They may or may not get the loan from the lender who gave the pre-approval.
- they will get the loan, but the interest rate may be different than originally quoted.
- They will definitely get the loan if they paid a non-refundable deposit to the lender.
- They will not get the loan, but now know what they qualify for.
They may or may not get the loan from the lender who gave the pre-approval.
^^^Which of the following is true when purchasing a non owner occupied rental property? A. Requires LP B. Requires manual underwriting C. Require DE D. Requires a down payment
B
A method of property description that Is the crudest of these and in which property lines are delineated based on natural landmarks such as rivers, trees and boulders is the A. Lot and Block Method B. Government Land Survey Method C. Monument Method D. Metes and Bounds Method
Answer C
The crudest of these approaches is the Monument Method in which property lines are delineated based on natural landmarks such as rivers, trees and boulders.
The most common property description method that occurs after a subdivision is platted is known as A. Lot and Block Method B. Government Land Survey Method C. Monument Method D. Metes and Bounds Method
Answer A
The Lot and Block Method is the most common and occurs after a
subdivision is platted. A plat map is a recorded drawing showing all the
blocks in a subdivision which have been subdivided into individual lots. Theplat map may also indicate streets, green areas, utility lines, etc.
What type of funding occurs when a lender obtains funds from a line ofcredit at a commercial bank? A. Credit lending B. Table funding C. Warehouse funding D. Temporary funding
Answer C
Warehouse funding occurs when a lender obtains funds for closing from aline of credit extended by a commercial bank.
A borrower wants to get an FHA loan, but a judgment appears on his credit report. Which of the following represents how the judgment will be treated?
- As long as the judgment was over one year ago, it has no bearing.
- With a letter of explanation, the borrower may be approved for an FHA loan.
- The judgment usually must be paid.
- If the judgment was over two years ago, it will have no bearing.
The judgment usually must be paid.
To determine the highest and best use of a property,
A. No encroachment
B. No Encumbrance
C. The use must be legally permissible, physically and functionally feasible.
D. The use must be legally permissible, physically possible and financially feasible.
Answer D
Many factors can affect market value, but the primary consideration is the highest and best use of the property. The use must be legally permissible (zoned for the use), physically possible (soil must be able to support any new foundation; property must have adequate drainage, etc.) and financially feasible (the income from the property must cover the cost of improvements).
How long before an appraisal needs to be re-certified and the appraiser need to do an external inspection? A. 4 months B. 6 months C. 12 months D. 30 days
Answer A
When an appraisal report will be more thanfour months old on the date of the note and mortgage, the appraiser must inspect the exterior of the property and review current market data to determine whether the property declined in value since the date of the original appraisal.
Which of the following can can make a recommendation to approve/eligible? A. Loan Prospector (LP) B. Desktop Underwriter (DU) C. Daniel’s Underwriting System (DUS) D. LP and DU
D
Which of the following can underwrite and close loans for FHA insure w/o prior submission
A. Direct Endorsement Lender (DE)
B. Desktop Underwriter
C. Loan Prospector
D. None of the above
Answer A
Which of the following is designation from the FHA is enabled to approve FHA residential loans for a-lender and proceed to closing without prior approval for mortgage insurance(MIP) from the FHA? A. Loan Prospector (LP) B. Desktop Underwriter (DU) C. Daniel’s Underwriting System (DUS) D. Direct Endorsement Underwriter (DE)
Answer D
Who makes the final decision as to whether a loan will be funded?A. The automated underwriting system
B. The lender
C. The real estate agent
D. The closing agent
Answer B
A borrower with other financed properties will need how much additional reserve if they have one to four financed properties?
A. 2% of the aggregate UPB (Unpaid Balance Principal)
B. 4% of the aggregate UPB (Unpaid Balance Principal)
C. 6% of the aggregate UPB (Unpaid Balance Principal)
D. 8% of the aggregate UPB (Unpaid Balance Principal)
A
A one-time closing cost to either the seller or borrower. A. Title Insurance Binder B. Title Insurance Premium C. Survey D. Hazard Insurance
Answer B
The most common type of legal description for residential subdivisions: A. The monument method B. Lot and block C. Metes and bounds D. Government land survey method
Answer B
The Lot and Block Method is the most common and occurs after asubdivision is platted.
Surveys are NOT certified to: A. Lenders B. Title insurers C. Buyers D. Real estate broker
Answer D
Surveys are certified to lenders, title Insurers and buyers.
The system electronically evaluates each individual loan application along with the appropriate credit report information and provides the lender with a recommendation as to whether or not the loan meets the criteria for loan approval is A. Loan Prospector (LP) B. Desktop Underwriter (DU) C. Daniel’s Underwriting System (DUS) D. LP and DU
Answer B
Which of the following is true of appraisals from VA?
A. Holds the lender responsible, and appraiser paid a flat fee
B. Requires appraisers to perform a limited home inspection report with the appraisal
C. Approved appraisers operate on a rotation system
D. The appraiser is paid a fee based on the value of the property
Answer C
VA-approved appraisers operate on a rotation system controlled by the VA.
^^^Your borrower wants to buy an investment property. Which of the following would be used in calculating the housing ratio? A. Primary residence utilities B. Investment property utilities C. Primary residence payment D. Investment property reserves
A. Primary residence payment
Which of the following is NOT true about the VOE?
- It must be provided for all employed applicants, and must be fully completed, signed, and dated .
- It must be sent directly by the processor to the employer.
- It must be signed by the personnel department or the borrower’s superior.
- It can be sent electronically to the borrower to be presented to the lender.
It can be sent electronically to the borrower to be presented to the lender.
A commitment that lists all the known defects on the home is known as a A. Title Insurance Binder B. Title Insurance Premium C. Survey D. Hazard Insurance
Answer A
A title insurance binder is a commitment that lists all the known defects. Theinsurance policy itself is issued after closing
Which of the following is true of appraisals from FHA?
A. Holds the lender responsible, and appraiser paid. Flat fee
B. Requires appraisers to perform a limited home inspection report with the appraisal
C. Approved appraisers operate on a rotation system
D. The appraiser is paid a fee based on the value of the property
Answer B
The FHA requires appraisers to perform a limited home inspection report with the appraisal,
which of the following occurs when the lender deals directly with theborrower without any middlemen? A. Direct investor funding B. Table funding C. Warehouse funding D. Retail Funding
Answer A
Direct investor funding occurs when the lender deals directly with the borrower without any middlemen.