Loan Application

Question 1

Which document is used to apply for a loan

Answer 1

1003

Question 2

What legislation was created as a result of the recession?

Answer 2

Dodd-Frank

Question 3

What is section one of the 1003?

Answer 3

The “Type of Mortgage and Terms of Loan” Section

Question 4

What is section two of the 1003?

Answer 4

Property Information and Purpose of the Loan

Question 5

What is required after the borrower provides the street address of the property?

Answer 5

A legal description, which is obtained from the county recorder’s office or through a title insurance company.

Question 6

What is a leasehold?

Answer 6

A lease hold is “an estate in realty held under a lease; an estate for a fixed term or years”. It does not secure permanent ownership.

Question 7

What is “fee simple”

Answer 7

The owner is entitled to the entire property with unconditional powers of disposition forever.

Question 8

What is in section three of the loan application?

Answer 8

Borrower information

Question 9

What is on section four of the loan application

Answer 9

Employment information

Question 10

what is section five of the URLA?

Answer 10

Monthly income and combined housing expense information

Question 11

What is section six of the loan application?

Answer 11

Assets and liabilities

Question 12

Which assets count as liquid assets?

Answer 12

Cash, “earnest money”, checking accounts, savings accounts, stocks, bonds, and cash value and face amount of life insurance policies

Question 13

What are some examples of non-liquid assets

Answer 13

Real estate, retirement account, net worth of businesses, cars

Question 14

What is the difference between liquid and non-liquid assets

Answer 14

Non-liquid assets cannot readily be converted into cash, whereas liquid assets are available immediately or near-immediately

Question 15

What is on section VII of the loan application?

Answer 15

details of the transaction

Question 16

What is in section VIII of the loan application?

Answer 16

declarations of other matters that might impact the borrower’s ability to repay the loan

Question 17

How long must bankruptcies and foreclosures be disclosed on the loan application?

Answer 17

Seven years

Question 18

What is section IX of the loan application?

Answer 18

Acknowledgement and agreement that the borrower understands the purpose of the loan and that the application will be secured by a deed of trust on the property

Question 19

What is section X of the loan application?

Answer 19

Information for government monitoring purposes

Question 20

What law requires section X to be filled out?

Answer 20

HMDA

Question 21

What does the Loan Originator do if the applicant refuses to fill out section X?

Answer 21

The LO must collect the data based on visual observation or surname.

Question 22

How long must a self-employed applicant show income for?

Answer 22

Two years, and they may request verification documents such as tax returns for the period, a year to date profit and loss statement, balance sheets for the past two years, or a self employed income analysis

Question 23

Why is the age of the borrower asked for on the loan application?

Answer 23

To make sure the borrower is of age to enter into a contract.

Question 24

Commission income must be verified if it represents how much of the applicants annual income?

Answer 24

25%