Loan Origination Activities

Question 1

Credit is:

Answer 1

sums of money received.

Question 2

The two types of documents associated with a loan

Answer 2

Mortgage and the promissory note

Question 3

Must simultaneously follow the instructions of the borrower and the seller in a sales transaction, as per the sales contract, escrow instructions, etc.

Answer 3

The Closing Agent - Settlement Agent - Title Agent

Question 4

Maximum allowable contributions by sellers and/or
lenders is 3% of the lesser of the appraised value or sales price for a principal
residence or second home if the LTV is greater than

Answer 4

90%

Question 5

Maximum allowable contributions by sellers and/or
lenders is 6% of the lesser of the appraised value or sales price for a principal residence or second home if the LTV is between

Answer 5

76% and 90%

Question 6

Maximum allowable contributions by sellers and/or

lenders is 9% of the lesser of the appraised value or sales price for a principal residence or second home if the LTV is

Answer 6

75% or less

Question 7

Legal evidence of the debt and is not recorded.

Answer 7

Note

Question 8

Does not cover damages due to perils of flood.

Answer 8

hazard insurance

Question 9

Assessing an individual’s risk (underwriting) may be done:

Answer 9

Manually or by AUS

Question 10

The spouse does not need to sign the note if

Answer 10

If his/her income is not taken into consideration

Question 11

A borrower may charge how much for an appraisal?

Answer 11

$500

Question 12

A borrower may charge how much to lock in fees?

Answer 12

1% of the loan amount to his/her credit card

Question 13

A borrower’s payment history on previous mortgages or rent must be:

Answer 13

Verified for 12 months

Question 14

Gift letter must contain:

Answer 14

Dollar amount of the gift, date the funds were transferred, and donors name, address, phone number and relationship to the borrower

Question 15

A borrower must use how much of their funds?

Answer 15

5%

Question 16

The borrower may rescind any lock-in agreement until a…

Answer 16

written confirmation of

the agreement has been signed by the lender and mailed to the borrower.

Question 17

Each lock-in agreement must be in writing and contain:

Answer 17

expiration date of the lock, the interest rate, any discount points, any commitment fee and lock-in fee if
these exist.

Question 18

Applications can be taken

Answer 18

face-to-face, over the phone, through the mail or over

the Internet.

Question 19

The first mortgage payment due date always:

Answer 19

skips one calendar month

Question 20

Daily interest rate:

Answer 20

loan amount x interest rate ÷ 365.

Question 21

Monthly interest rate

Answer 21

loan amount x interest rate ÷ 12

Question 22

Annual interest rate

Answer 22

loan amount x interest rate

Question 23

Yield spread premium (or lender credits):

Answer 23

is a tool MLOs can use to reduce a

borrower’s settlement costs.

Question 24

Origination Fee is shown on:

Answer 24

Covers administrative costs to close/service loan.

Question 25

gives a borrower a lower interest rate for the life of the loan.

Answer 25

Fixed discount

Question 26

Discount point/Buy Down can be paid by the:

Answer 26

borrower, seller, builder, etc.

Question 27

All origination points must be:

Answer 27

lumped together as the origination fee on the Loan

Estimate

Question 28

discount points used to buy down the rate must be:

Answer 28

indicated as a charge the borrower incurs for the interest rate selected.

Question 29

Each discount point and each loan origination point cost:

Answer 29

1% of the loan amount

Question 30

are paid to the loan originator as a fee for service

Answer 30

origination point

Question 31

;Points are often used to

Answer 31

lower interest rates and each point will lower the rate by 0.25%.

Question 32

The Total Debt to Income Ratio =

Answer 32

PITI + other monthly debt ÷ Gross Monthly

Income

Question 33

total amount needed to purchase property, including down payment, loan amount, and any allowable buyer-paid closing costs.

Answer 33

Acquisition cost

Question 34

Public Assistance Income is “non-taxable” income and can be consider any of the following:

Answer 34

child support, alimony, social security income, retirement income, pension, etc.

Question 35

If unemployment is a part of their natural annual work cycle, then it can be included in their qualifying income if it has shown for the:

Answer 35

past two years on the borrowers tax return (the average

$$ amount is used)

Question 36

Receipt of alimony or child support payments must continue for:

Answer 36

3 years beyond the application date in order to be included as income.

Question 37

Retirement and pension income must continue for:

Answer 37

3 years beyond the application

date in order to be included as income.

Question 38

Commission, Overtime, Bonus, Part-time, Interest and Dividend income must be

Answer 38

averaged over 2 years.

Question 39

Employment income must be verifiable for

Answer 39

the past two years

Question 40

summarizes the company’s assets and liabilities over

a range of time. A balance sheet depicts the company’s book value at a single moment in time. It is a snapshot of value.

Answer 40

Profit and Loss Statement

Question 41

Consumer debts that have ______ of payments remaining do not need to be included for the purpose of calculating debt ratios.

Answer 41

less than 10 months of payments

Question 42

Underwriters want to confirm that the borrowers have

Answer 42

sufficient assets and personal money

Question 43

net worth is determined by

Answer 43

Assets - Liabilities