Exam-Mortgage loan origination activities Flashcards
If a borrower is denied financing based on an incomplete application, which of the following can be done?
a) Send a letter explaining that they do not meet internal credit standards 30 days after the date of the credit report.
b) Notify borrower by telephone within the next couple of days.
c) Send a written notice of incompleteness within 30 days of the last action taken or of the incompleteness
d) Notify the borrower in person within the next 15 days
c) Send a written notice of incompleteness within 30 days of the last action taken or of the incompleteness
Which of the following is true concerning Service Release Premium (SRP)?
a) Loan term is a factor of the SRP
b) Type of loan does not affect the SRP
c) The interest rate is a factor of the SRP
d) There is no such thing as SRP
d) There is no such thing as SRP
How is rental income calculated when the borrower owns rental properties other than the subject property?
a) 100% of the income less the PITI. If the net is positive, include as income; if the net is negative, include as a monthly debt
b) Only when the borrower has a two year history of managing rental properties
c) 75% of the income less the PITI. If the net is positive, include as income; if the net is negative, include as a monthly debt
d) Only when the borrower has a two year history of managing rental properties and the borrower has rent loss insurance
c) 75% of the income less the PITI. If the net is positive, include as income; if the net is negative, include as a monthly debt
The borrower is putting 10% down on a $180,000 sales price. She is paying 2.5 discount points and a 1% origination fee. What is the total of the origination fee and discount points she is paying?
a) $5,670
b) $6,300
c) $1,800
d) $6,120
a) $5,670
A borrower has an Interest Only mortgage loan and wishes to make the minimum monthly payments required. If the homeowner decides to payoff the loan at the end of the loan term, what will the homeowner be required to pay?
a) The original loan amount
b) A balance greater than the original loan amount
c) A balance less than the original loan amount
d) The entire purchase price of the property
a) The original loan amount
What is the note rate for a $150,000 loan with a 2/1 buy down when the borrowers start with a payment rate of 4% for 12 months; then 5% for another 12 months; then 6% for the rest of the payment term?
a) The note includes all three interest rates.
b) 4%
c) 5%
d) 6%
d) 6%
Private Mortgage Insurance is required on conforming 1st mortgage loans when the Loan-To-Value is:
a) above 80%.
b) 70% - 79.99%.
c) above 80% except if the loan has a 15-year term.
d) 80% - 89.99%.
a) above 80%.
What is the HCLTV (HTLTV) assuming a $200,000 value, a $100,000 first mortgage loan, and a $50,000 Home Equity Line of Credit second mortgage with a drawn amount of $30,000?
a) 50%
b) 65%
c) 75%
d) 100%
b) 65%
When you order an Insurance binder on a borrower’s loan file, the one-page sheet that summarizes all the insurance information is known as the:
a) binder summary page.
b) Declaration page.
c) 1008.
d) binder reference page.
b) Declaration page.
On an FHA annually adjusting ARM,
1. assume that the starting rate was 5%;
the margin is 2.5%;
- the index in 6 months is 3%;
- the index in 12 months is 3.5%;
- the index in 18 months is 3.25%.
What is the borrower’s interest rate in 18 months?
a) 5.00%
b) 6.00%
c) 5.50%
d) 5.75%
d) 5.75%
Calculate the borrower’s maximum housing payment if the qualifying ratios are 28/36, the husband’s income is $48,000 per year, and the wife makes $2,500 per month?
a) $2,044
b) $1,820
c) $2,628
d) $2,340
b) $1,820
At closing, the borrower should receive a notice of the right to rescind. If two copies are not provided to the borrower at closing, the right to rescind extends from 3 days to:
a) 1 year
b) 3 years
c) 30 days
d) 10 years
b) 3 years
If an MLO has a borrower who has had a foreclosure in the past and is looking to obtain a conventional mortgage, how long does that foreclosure have to be seasoned on the credit report before the borrower can qualify?
a) 7 years
b) 4 years
c) 2 years
d) 3 years
a) 7 years
For an interest only loan of $180,000 with a 5% interest rate, how much is the dollar amount of interest for 7 months?
a) $5,500
b) $6,500
c) $9,000
d) $5,250
d) $5,250
Your customer owns several rental properties, one-third of which have a Negative Net Lease. Therefore, you can conclude that:
a) two of the rentals are owned outright.
b) the rents are equal to or less than the mortgage amount due each month.
c) more rent is collected than your borrowers owe in payments each month.
d) one out of the three rental properties is vacant.
b) the rents are equal to or less than the mortgage amount due each month.
Under what circumstances would it be possible to consider capital gains as income for a Fannie Mae or Freddie Mac loan?
a) If the borrowers can get written verification from their mortgage loan servicer that the income will continue
b) If the borrowers can verify a minimum of two years income on their tax returns and still own the asset
c) If the borrowers can verify one year income on their tax returns and get a CPA letter
d) If the borrowers are using the asset/income as part of their down payment
b) If the borrowers can verify a minimum of two years income on their tax returns and still own the asset
Which of the following sources of income would NOT be allowed on a conforming conventional loan?
a) Salary income when the borrower has worked for only 6 months
b) Social Security income
c) Income from a rental property that has been owned only 2 years
d) Child support received for a 16-year-old child
d) Child support received for a 16-year-old child
The lender discloses the prepayment penalty on which of the following documents?
a) The 1003
b) Loan Estimate
c) ECOA disclosure
d) The trust deed and the trust deed note
b) Loan Estimate
A borrower purchases a home for $120,500 and is putting 10% down. If he has already paid $2,500 in earnest money, what is the rest of the down payment at closing?
a) $8,345
b) $8,550
c) $9,550
d) $10,500
c) $9,550
What fee is not included in the Loan Estimate?
a) Appraisal fee
b) Credit reporting fee
c) Mortgage broker fee
d) Real estate broker fee
d) Real estate broker fee
What are two of the most important documents that the borrower signs at settlement?
a) Error and Omissions and the Loan Note
b) The Loan Note and First Payment Letter
c) The Mortgage and Right of Rescission
d) The Promissory Note and the Deed of Trust or mortgage
d) The Promissory Note and the Deed of Trust or mortgage
If the borrower’s monthly gross income was $6,000 and the monthly housing expense was:
first mortgage payment, $900;
monthly property tax $110;
monthly hazard insurance $28;
and monthly mortgage insurance $60, what is the housing ratio or frontend ratio?
a) 15.00%
b) 16.00%
c) 18.30%
d) 17.30%
c) 18.30%
What is the housing ratio for a borrower who makes $24,000 a year with a payment amount of $560?
a) 25%
b) 28%
c) 23%
d) 31%
b) 28%
If there are two borrowers on the loan but the two borrowers are unmarried, they would be considered what:
a) Co-mortgagors
b) Co-borrowers
c) Community property holders
d) Title sharers
a) Co-mortgagors
The lender is requiring repairs on the home to be completed. Those repairs can be done after the loan closes by including them in a(n):
a) Escrow Holdback.
b) Earnest Money Deposit.
c) Lender Retainer.
d) Repairs Completion Account (RCA).
a) Escrow Holdback.
You have a borrower who makes $21 an hour and overtime every month. What must you do to ensure that you can use the overtime?
a) Just count the overtime
b) Subtract the overtime from the gross income
c) Figure his gross income and make sure he can prove overtime over a two-year period
d) Use the gross monthly income figure your borrower discloses
c) Figure his gross income and make sure he can prove overtime over a two-year period
Which of the following situations always require full tax returns as documentation of income?
a) When proof of hourly wages are needed
b) When verifying self-employment income
c) Full tax returns are never required just the Adjusted Gross Income on the first page
d) When receiving W-2 only income
b) When verifying self-employment income
URLA is the acronym for:
a) Uniform Residential Land Appraisal.
b) Uniform Residential Loan Application.
c) Uniform Residential Lot Appraisal.
d) Universal Residential Loan Application.
b) Uniform Residential Loan Application.
On which type of loan does the CHARM booklet need to be sent to the borrower?
a) HELOC
b) ARM
c) Reverse mortgage
d) FHA
b) ARM
Under Section X, Information For Government Monitoring Purposes, you ask the borrower race, ethnicity, and gender questions. The borrower tells you that s/he does not wish to furnish that information. In a face to face loan application, what should you do?
a) Tell the borrower that the questions must be answered for a loan application to be considered complete.
b) Leave the answers blank but check the box “I do not wish to furnish this information”.
c) Fill in the answers you are sure are correct.
d) Make your best guess and fill in all the information.
d) Make your best guess and fill in all the information.
