Loan Origination Activities Flashcards
Credit is:
sums of money received.
The two types of documents associated with a loan
Mortgage and the promissory note
Must simultaneously follow the instructions of the borrower and the seller in a sales transaction, as per the sales contract, escrow instructions, etc.
The Closing Agent - Settlement Agent - Title Agent
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
90%
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
76% and 90%
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
75% or less
Legal evidence of the debt and is not recorded.
Note
Does not cover damages due to perils of flood.
hazard insurance
Assessing an individual’s risk (underwriting) may be done:
Manually or by AUS
The spouse does not need to sign the note if
If his/her income is not taken into consideration
A borrower may charge how much for an appraisal?
$500
A borrower may charge how much to lock in fees?
1% of the loan amount to his/her credit card
A borrower’s payment history on previous mortgages or rent must be:
Verified for 12 months
Gift letter must contain:
Dollar amount of the gift, date the funds were transferred, and donors name, address, phone number and relationship to the borrower
A borrower must use how much of their funds?
5%
The borrower may rescind any lock-in agreement until a…
written confirmation of
the agreement has been signed by the lender and mailed to the borrower.
Each lock-in agreement must be in writing and contain:
expiration date of the lock, the interest rate, any discount points, any commitment fee and lock-in fee if
these exist.
Applications can be taken
face-to-face, over the phone, through the mail or over
the Internet.
The first mortgage payment due date always:
skips one calendar month
Daily interest rate:
loan amount x interest rate ÷ 365.
Monthly interest rate
loan amount x interest rate ÷ 12
Annual interest rate
loan amount x interest rate
Yield spread premium (or lender credits):
is a tool MLOs can use to reduce a
borrower’s settlement costs.
Origination Fee is shown on:
Covers administrative costs to close/service loan.
gives a borrower a lower interest rate for the life of the loan.
Fixed discount
Discount point/Buy Down can be paid by the:
borrower, seller, builder, etc.
All origination points must be:
lumped together as the origination fee on the Loan
Estimate
discount points used to buy down the rate must be:
indicated as a charge the borrower incurs for the interest rate selected.
Each discount point and each loan origination point cost:
1% of the loan amount
are paid to the loan originator as a fee for service
origination point
;Points are often used to
lower interest rates and each point will lower the rate by 0.25%.
The Total Debt to Income Ratio =
PITI + other monthly debt ÷ Gross Monthly
Income
total amount needed to purchase property, including down payment, loan amount, and any allowable buyer-paid closing costs.
Acquisition cost
Public Assistance Income is “non-taxable” income and can be consider any of the following:
child support, alimony, social security income, retirement income, pension, etc.
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:
past two years on the borrowers tax return (the average
$$ amount is used)
Receipt of alimony or child support payments must continue for:
3 years beyond the application date in order to be included as income.
Retirement and pension income must continue for:
3 years beyond the application
date in order to be included as income.
Commission, Overtime, Bonus, Part-time, Interest and Dividend income must be
averaged over 2 years.
Employment income must be verifiable for
the past two years
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.
Profit and Loss Statement
Consumer debts that have ______ of payments remaining do not need to be included for the purpose of calculating debt ratios.
less than 10 months of payments
Underwriters want to confirm that the borrowers have
sufficient assets and personal money
net worth is determined by
Assets - Liabilities
