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Real Estate > How To Think Like An Underwriter > Flashcards

How To Think Like An Underwriter Flashcards

1
Q

Another name for the loan application is
A: 1003
B: 1008
C: CD
D: HUD-1

A

A: 1003

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2
Q

Lets Continue about Underwriting!

A
  • Underwriting is the process where Lending institutions determine process if the customer is accountable, responsible and eligible for its services
  • Ability to repay rule: The ability-to-repay rule is the reasonable determination majority of mortgage lenders are required to make that the client is able to pay back the loan.
  • There are specific rules and regulations/requirements that MUST
    be followed when going through the loan application
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3
Q

Automated Underwriting

A
  • Automated underwriting is a technology driven underwriting process that provides a computer generated loan decision.
  • The lending industry is broadly migrating to the use of new technology driven loan underwriting platforms to improve
    the processing time for all types of loans
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4
Q

What are the different loan Programs?

A
  • Conventional
  • FHA
  • UT Housing
  • VA
  • USDA Rural Housing
  • Reverse Mortgage
  • Jumbo
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5
Q

Conventional Loan

A
  • Some Pros’ and Cons’

Pros:
* As low as 3%-5% down
* Minimum FICO score of 620

Cons:
* Longer waiting periods on credit delinquencies
* Rates are slightly higher

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6
Q

VA LOAN

A

Pros
* $0 down program for veterans
* Minimum Fico Score 620
* Shorter waiting period on credit delinquencies

Cons
* VA funding Fee
* County Loan Limits

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7
Q

FHA LOAN

A

Lets talk about FHA Loans:
Pros:
As low as 3.5% down
Minimum FICO score 620

Cons:
Mortgage Insurance for the life of the loan for FHA Higher Rates
Income limits
County Loan Limits

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8
Q

USDA Rural Housing Loans

A

Pros:
* $0 Down program
* Minimum Fico Score: 640
* Shorter waiting period on credit delinquencies

Cons:
* Areas are determined
* County income limits
* Lower DTI Ratios

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9
Q

Automated underwriting is called
A: Technology Driven Underwriting Process That Gives A Computer Generated Loan Decision
B: A Process Where The Loan Application Is Checked By Loan Analysts
C: Both A & B
D: None Of The Above

A

A: Technology Driven Underwriting Process That Gives A Computer Generated Loan Decision

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10
Q

What is Pre-Qualified?

A
  • Submitting the loan application and having your credit pulled to determine if you are eligible to receive a loan
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11
Q

What is Pre-Approval?

A

*Pre- Approval is the BEST!
* The following conditions have to be completed:
* Loan Application- Completed!
* Credit Pulled
* Income & Asset documents have been reviewed
* File ran through automated underwriting system

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12
Q

Desk Top Underwriting

A

Desk top underwriting is
* an automated program used by loan originators to quality a sorrower through Fannie Mae policies and requirements for a
conventional loan
* Desktop underwriter is also used for FHA loans

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13
Q

What is the Approval Process?

A
  • The loan file must have all required documentations
  • Loan officer MUST review the file to ensure everything is complete accurately
  • Underwriter must evaluate the four C’s
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14
Q

What are the 4 C’s

A

*Character
* Capacity
* Capital
* Conditions

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15
Q

Denial

A

Mortgage loan requests that do not meet the minimum requirements and fall short of the Fannie Mae and Freddie Mac requirements will most likely have a statement that issues an underwriting denial

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16
Q

FHA Loan requires
A: 3.5% Downpayment
B: 1.5% Downpayment
C: 2.0% Downpayment
D: None Of The Above

A

A: 3.5% Downpayment

17
Q

Prior to Funding

A
  • PTF: Prior to Funding refers to conditions that will arise after an underwriter reviews the loan. * These requirements must be met before the loan will be funded by the lender
18
Q

PTC

A

Property Technical Certification * Gain the technical knowledge and skills you need to accurately adjust residential and commercial property losses.

19
Q

Which of the following are loan programs?
A: FHA
B: VA
C: Conventional
D: All Of The Above

A

D: All Of The Above

20
Q

Secondary Market

A

Secondary Market:
* The secondary market is where investors buy and sell securities they already own.
* It is what majority of people usually think of as the “stock market,” though stocks are also sold on the primary market when they are
first issued

21
Q

What are the four C’s of mortgage underwriting?
A: Character, Capacity, Capital, Conditions
B: Credit, Capacity, Collections, Capital
C: Credit, Collateral, Communication
D: None Of The Above

A

A: Character, Capacity, Capital, Conditions

22
Q

Pending

A
  • Pending is:
  • When the underwriter is the process of reviewing the file
  • Income documents
  • The application
  • Verifying the loan’s officer work
  • Sending the documents through the automated underwriting system
  • The final step is issuing a conditional approval or rejection
23
Q

Deadlines | Appraisals

A
  • Appraisal/Financing Deadline
  • Appraisal needs to be received
  • File has been underwritten
  • Settlement Deadline
  • Buyer signs on this particular date
24
Q

Loan Prospector

A
  • Loan Prospector provides lenders a fast, automatic system that calculates the risk involved of underwriting a mortgage.
  • LP evaluates the borrower’s loan application
  • LP reviews the applicant’s Debt to Income Ratio
  • It looks through their credit history
  • It reviews the down payment the applicant can make
  • The end result tells the lender the level of risk involved with this particular loan and if Freddie Mac is willing to buy the mortgage.
25
Q

When taking a loan application, a mortgage loan originator needs to:
A: Make Certain All Pages Are Initialed
B: Make Certain The Last Page Is Signed By All Borrowers
C: Consult The Broker
D: Both A & B

A

D: Both A & B

26
Q

Another name for the loan application is
A: 1003
B: 1008
C: CD
D: HUD-1

A

A: 1003

27
Q

When it comes to signatures on a loan application, one thing we need to remember is
A: Docusign Is Not Allowed For Loan Application
B: All Signatures Need T Be “Wet” Signatures
C: No Signatures Can Be Forged
D: All Documents Need To Be Signed At The Same Time

A

C: No Signatures Can Be Forged

28
Q

Documentation the underwriter will definitely need includes
A: Bank Statements, Tax Returns, Pay Stubs, W-2
B: Bank Statements, Utility Bills, Tax Returns, W2s
C: Credit Card Statements, Utility Bills, Pay Stubs, W2s
D: Credit Card Statements, Tax Returns, Pay Stubs, W2s

A

A: Bank Statements, Tax Returns, Pay Stubs, W-2

29
Q

The ratio the underwriter needs to look at are the
A: Debt To Income Ratio
B: Loan To Value Ratio
C: Both A & B
D: Neither A & B

A

C: Both A & B

30
Q

The mortgage loan officer indicates on the loan application that the buyer is going to put $20,000 down at closing but only has $400 in their checking account. Which of the following statements are true?
A: This Will Not Be A Problem
B: This Will Only Be A Problem If The Borrower’s Ratios Are Too High
C: This Will Only Be A Problem If The Buyer Has Poor Credit
D: This Is Going To Be A Problem

A

D: This Is Going To Be A Problem

31
Q

“Is it real” refers to
A: Are The Tax Returns The Same Ones Submitted To The IRS
B: Was The Earnest Money Actually Paid By The Buyer
C: Do The Bank Statements Provided Actually Belong To The Buyer
D: All Of The Above

A

D: All Of The Above

32
Q

One thing we need to really remember as real estate professionals is
A: We Are Not Mortgage Loan Professionals And Should Never Quote Interest Rates
B: We Do Not Have To Know Anything About Mortgage Loans
C: We Do Not Have To Know Anything About Tax Implications Of Buying Real Estate
D: We Do Not Have To Know Anything About The Legal Aspects Of Buying And Selling Real Estate

A

A: We Are Not Mortgage Loan Professionals And Should Never Quote Interest Rates

33
Q

The purpose of the earnest money is
A: To Provide Liquidated Damages For Both Buyer And Seller In The Event Of Default Of Either Party
B: To Show How Serious The Buyer Is About Purchasing This Property By Putting Some “Skin In The Game”
C: None Of The Above
D: Both A & B

A

D: Both A & B

34
Q

As a real estate professionals, we need to make absolutely certain that
A: The Names On The Title And The Real Estate Purchase Contract Are Exactly The Same
B: All Names Are Spelled Exactly Correctly
C: Every Person Who Is Going To Be On The Loan Are Also On The Real Estate Purchase Contract
D: All Of The Above

A

D: All Of The Above

Real Estate (39 decks)

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