Chapter 8 Quiz: Overview of the Loan Process Flashcards
An escrow agent:
a. fills out the loan application
b. acts on the instructions of the parties to the loan
c. determines the value of the property
d. none of the above
b. acts on the instructions of the parties to the loan (p. 213)
an escrow agent can only act on the “written instructions of all parties” to the transaction.
An appraiser:
a. provides an opinion of the value of the loan
b. provides an opinion of the value of the borrower’s credit
c. provides an opinion of the value of the property
d. none of the above
c. provides an opinion of the value of the property (p. 192)
a licensed appraiser provides a professional opinion of the value of the property.
A purchase agreement (acceptance of all details by the buyer and seller) is:
a. provided by the lender at the close of the loan
b. provided by the borrower at the close of the loan
c. not required
d. a contract that shows the terms of sale and expected closing date of escrow
d. a contract that shows the terms of sale and expected closing date of escrow (p. 181)
a purchase agreement (sales contract) is completed y a home purchaser and seller; it contains the sale terms and the date that the parties expect the transaction to close.
A credit report is:
a. not necessary
b. paid for at the time of application
c. provided by the lender
d. ordered by the escrow agent
b. paid for at the time of application (p. 192)
the lender will order a credit report and have a preliminary title report prepared (at the time of application).
a credit report verifies the borrower’s credit standing.
A bankruptcy in the last seven years would be noted on what section of the application?
a. assets and liabilities
b. borrower information
c. declarations
d. income
c. declarations (p. 204)
any foreclosure or bankruptcy within the past seven years must be disclosed.
Real estate loans would be noted on what part of the loan application?
a. assets (real estate) and liabilities (amount owed on real estate)
b. declarations
c. details of purchase
d. none of the above
a. assets (real estate) and liabilities (amount owed on real estate) (p. 198)
(section i) type of mortgage and terms of loan:
-the MLO notes the type of loan requested, ex: convention, FHA, VA, as well as loan amount, interest rate and terms.
Information provided for government monitoring purposes is:
a. required
b. voluntary
c. highly intrusive
d. none of the above
b. voluntary (p. 205)
(section x) information for government monitoring purposes:
-this section asks for the race, national origin, and sex of the borrower. this information is entirely voluntary on the part of the borrower and is collected to help the federal government monitor lenders’ compliance with the anti-discrimination laws.
A borrower must provide employment status for the past:
a. one year
b. two years
c. three years
d. five years
b. two years (p. 205)
employment history: names, addresses, and zip codes of where the buyer has been employed for the last two years, the position held, whether the employment was full-time, part-time or temporary, and the income being earned.
Financial discrimination in the loan process is prohibited by:
a. the Fair Housing Act
b. the Credit Bureau Act
c. the Equal Credit Opportunity Act
d. none of the above
c. the Equal Credit Opportunity Act (p. 197)
The federal ECOA prohibits discrimination based on age, sex, race, marital status, color, religion, or national origin.
Bankruptcies and foreclosures must be reported if they have occurred in the past:
a. five years
b. three years
c. seven years
d. none of the above
c. seven years (p. 204)
(section viii) declarations (seven year foreclosure/bankruptcy):
-in this section, the applicants are required to note if there have been any legal judgments against them, if they have had a foreclosure within the past seven years, if they have declared bankruptcy within the past seven years must be disclosed.
