Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Mortgage Processing > Conventional Lending > Flashcards

Conventional Lending Flashcards

1
Q

What is Ability to Repay (ATR)?

A

Lender must make reasonable good-faith determination that borrower can repay loan before consummation of loan

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is a qualified mortgage (QM)?

A

Minimum standards for conventional mortgage

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What does QM not apply to?

A

Open-ended credit plans, HELOC, reverse mortgage, temporary bridge loans, construction or construction-to-perm loans

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What components of ATR/QM must be verified?

A

Credit, consumer and long term debt, mandatory expenses, mortgage payments

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

ATR Factors

A

Income or assets that is relied on to repay loan; employment; PITI; simultaneous liens on same property; consumer debts, alimony, and child support; DTI; credit history

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

QM Standards

A

Meets ATR requirements; points and fees charged may not exceed 3%; protects borrower from mortgages they can’t afford; lenders have certainty about the borrower

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

How are lenders protected for originating lower priced QM loans?

A

Under safe harbor

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

When is a QM loan considered higher priced?

A

Loan is in first lien with an an APR that exceeds APOR by >1.5%
Loan is subordinate with APR that exceeds APOR by >3.5%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What are 2 types of QM loans?

A

General (meet all ATR guidelines and DTI of 41%)

Temporary (meet all ATR guidelines, eligible, does not have DTI limits)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What kind of loans do FNMA and FHLMC agencies buy?

A

Loans that meet their guidelines (eligible)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What are the maximum and minimum loan terms for FNMA and FHLMC loans?

A

Max 30 years, minimum 10 years

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is the threshold LTV for PMI?

A

80%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

How many financed properties can a borrower have if a mortgage is secured by a second home or investment?

A

10

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What are the requirements for verifiable documentation?

A

Fascimile verification; no alternations or erasures; legible copies; cannot come from agent or builder

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

How do you document verbal verification?

A

Person who contacted employer; name of entity contacted; name and title of individual; date; informoation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

When do documents expire?

A

Paystubs and bank statements- 60 days

Everything else- 120 days

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Which credit score do you use?

A

When there are 3 scores available, the median

When there are 2 scores available, the lower

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Can a home value include personal property such as furniture, pool equipment, appliances, etc?

A

No

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What standards must an appraiser meet?

A

Is state certified where property is located; experienced appraising properties similar to subject property; actively engaged in this work; has knowledge of current real estate market

20
Q

What are unacceptable appraisal practices?

A

Inaccurate or incomplete data on property, neighborhood, etc.
Not reporting or considering adverse effect on value and marketability
Using comparable sales provided from interested parties

21
Q

How are cash reserves verified?

A

VOD or 2 months worth of bank statements

22
Q

How are gifts from relatives documented?

A

Letter stating no repayment is expected; specific dollar amount and source of funds; donor’s name, address, telephone #, and relationship; property being purchased; and proof that funds were transferred

23
Q

What organizations can give gifts

A

Church, municipality, non-profit, public agency following same documentation from relatives

24
Q

How is a sale of assets documented?

A

if a previous home, HUD-1 or closing disclosure

25
Q

How are trust funds documented?

A

Trust agreement and/or signed statement on letterhead showing proof of value in trust account, that borrower has access to funds, and trustee is an independent party

26
Q

How are stocks, bonds, and mutual funds documented?

A

Must show that assets are liquidated, quarterly statement

27
Q

What demonstrates employment stability?

A

2 years employment history with stable income

28
Q

What is the ideal front ratio?

A

28%

29
Q

How do you count income from commission, part-time, overtime, and bonuses?

A

If not consistent, must consider YTD paystubs and previous 2 W2s to establish income

30
Q

What % of a business must the borrower own to be considered self-employed?

A

At least 25%

31
Q

How much can social security income be grossed up?

A

Nontaxable portion can be grossed up 25%

32
Q

How long does social security, alimony, child support, trust benefits, VA benefits, royalties, and military allowances continue to be considered income?

A

3 years

33
Q

How much of rental income can count as income?

A

75%

34
Q

What are compensating factors to offset higher DTI?

A

Large down payment; accumulate savings and maintain good financial position; potential for increased earnings; net worth; home purchase due to relocation

35
Q

What are “extenuating circumstances” that can affect credit negatively?

A

Non-recurring circumstances beyond borrower’s control

36
Q

How can derogatory credit be documented and off set?

A

Letter of explanation

37
Q

Can a borrower have a past due housing payment?

A

no

38
Q

What is the waiting period for Chapter 7 and 11 bankruptcies?

A

4 years from discharge date

39
Q

What is the waiting period for Chapter 13 bankruptcy?

A

2 years from discharge

40
Q

What is the waiting period after foreclosure?

A

7 years from actual foreclosure completion date

41
Q

What are the benefits of refinancing?

A

Reduce monthly payments, consolidate debt, tap into equity, get out of mortgage product

42
Q

What are the cons of refinancing?

A

Break even point to recoup money, transaction costs rolled into loan amount

43
Q

What are the two types of refinances?

A

Rate and Term and Cash Out

44
Q

What is borrower equity?

A

Cash that the borrower has

45
Q

Can the seller contribute to the down payment?

A

No

Mortgage Processing (9 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions