Initial Application

Question 1

What is Pre-Qualifying?

Answer 1

The borrower supplies the lender with their overall financial picture. The information is evaluated and the lender lets the borrower know for how much they would like to qualify. Will include credit report

Question 2

What is a trigger term? What must be disclosed?

Answer 2

Any number listed in advertisement. APR must be disclosed. “Easy monthly payments” would not be considered a trigger term.

Question 3

If a borrower asks about a credit plan and the costs associated with it, the MLO must disclose what?

Answer 3

The APR first!

Question 4

The MAP Rule, or Reg N. Prohibits misrepresentation in a commercial communication about any terms of a mortgage product. What are the 3 important terms to remember?

Answer 4

Term - means any of the fees, costs, obligations or characteristics of or associated with the product.
Mortgage Credit Product - any form of credit that is secured by real property or a dwelling and that is offered or extended to a consumer.
Commercial Communication - anything promotional materials by most means

Question 5

Under the Truth and Lending Act or (TILA) an application is a collection of 6 pieces of information. These are?

Answer 5

Name
SSN
Loan amount requested
Borrower income
Subject property address
Estimated Property Value

Anytime this information is received an application has been made and must make appropriate disclosures to the borrower.

Question 6

What is the 1003?

Answer 6

The Uniform Residential Loan Application or 1003.

Question 7

How does reg x or RESPA define residential property?

Answer 7

1-4 family single-family dwelling. If more than 4 units, considered to be a commercial property.

Question 8

How many years of property address must be recorded?

Answer 8

2 years, must include old address if less than 2 years.

Question 9

The Estate will be held in: Fee Simple or Leashold. What do these mean?

Answer 9

Fee simple means that the borrower owns the land as well as the house on the land. Leasehold means that the borrower leases the land but own the dwelling secured by the loan. (Hawaii, Dakotas and Massachusettes are some states that have this)

Question 10

Can borrowers that are married fill out the same 1003?

Answer 10

Yes

Question 11

Can two borrowers that are not married fill out the same 1003? What are they called?

Answer 11

No, must fill out seperate 1003s. Also called co-mortgages!

Question 12

What does PITI stand for?

Answer 12

Principal
Interest
Taxes (Real Estate)
Insurance

Question 13

When does the LE or Loan Estimate have to be provided to the borrower?

Answer 13

Within 3 business days of application

Question 14

What is the latest the LE can be submitted in mail before consummation?

Answer 14

7 business days

Question 15

Can a lender request verifying information and documents before providing LE?

Answer 15

No, LE must be sent first (TRID)

Question 16

Can creditors impose fees on borrower before intent to proceed?

Answer 16

No, No fees can be charged to borrower before intent to proceed

Question 17

Can a credit report fee be imposed on borrower before intent to proceed?

Answer 17

Yes, only exception to fees before LE and intent to proceed.

Question 18

Do you have to document the intent to proceed?

Answer 18

Yes.

Question 19

What is considered a business day?

Answer 19

All days the lender is open, possibly including saturdays.

Question 20

What are the rules for cost rule for origination charges, what borrowers cannot shop for vs. shop for.

Answer 20

• 0 tolerance for items a borrower can not shop for. Ie origination fee
• 10% cumulative tolerance for items the borrower can shop for. Ie. Title fees, survey fees.
• No tolerance for services that the borrower can shop for that are not provided on the list. Ie hazard insurance.

Question 21

When is the latest the consumer can receive the final revised LE?

Answer 21

No later than 4 business days prior to closing (or consummation)

Question 22

What are acceptable reasons why an LE can be changed?

Answer 22

• An extraordinary events beyond the control of any interest party. (Hurrican, act of God)
• Information specific to the consumer or the transaction that the creditor relied upon and is now inaccurate. (Lower than expected appraisal)
• New info specific to the consumer or transaction that the creditor did not rely on when providing the disclosures. (Unknown tax lien)

Question 23

What is the APR (Annual Percentage Rate)?

Answer 23

Is the cost of the loan expressed as a rate. This includes closing cost mortgage insurance etc. Not the interest rate!

Question 24

What is the TIP or Total Interest percentage?

Answer 24

The total amount of interest that the borrower will pay over the loan term as a percentage of your loan amount.

Question 25

What typically is sent out with the 1003 and LE?

Answer 25

4506-T Form, is used to obtain a copy of the borrowers tax transcripts to determine whether they can qualify for a mortgage.
Home Loan Toolkit - (required by TRID) document must be provided to the borrower within 3 buss days.

Question 26

Any special rules for a High-Cost and Higher priced home loans and ones with neg am?

Answer 26

Yes, the HOEPA or homeownership and equity protection act under TILA requires that the borrower receive counseling and from that a written certificate.
Also requires that on federally-related loan applications receive a list of housing counselors. Must be sent within 3 business days after receiving application.