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Mortgage Stuffs > Mortgage 101 > Flashcards

Mortgage 101 Flashcards

1
Q

What does FHA stand for?

A

Federal Housing Administration

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2
Q

When was the FHA created?

A

1934

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3
Q

What does FNMA (Fannie Mae) stand for?

A

Federal National Mortgage Association

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4
Q

What does FHLMC (Freddie Mac) stand for?

A

Federal Home Loan Mortgage Corporation

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5
Q

What is PITIA (or sometimes PITI)?

A

Monthly Housing Payment

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6
Q

What items are part of PITIA?

A

Principal & Interest, Real Estate Taxes, Homeowners Insurance, Flood Insurance, Mortgage Insurance, HOA Dues

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7
Q

What type of Mortgage Insurance (MI) is required for a Conventional Loan and when?

A

PMI (Private Mortgage Insurance), when LTV > 80%

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8
Q

What type of Mortgage Insurance is required for a FHA loan?

A

MIP (Monthly Insurance Premium)

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9
Q

What type of Mortgage Insurance is required for a VA loan?

A

Funding Fee

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10
Q

What are the four primary loan purposes?

A

New purchase, Rate & Term Refinance, Cash Out Refinance, New Construction

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11
Q

What are the 4 primary Occupancy Types?

A

Primary Residence, Second Home, Investment Property, Mixed Use (not a thing for this position)

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12
Q

What are the two conventional loan programs?

A

Fannie Mae, Freddie Mac

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13
Q

What type of loan requires no down payment?

A

A VA loan

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14
Q

What are the 3 Automated Underwriting Systems?

A

Desktop Underwriter (DU), Loan Advisor (LA), Gus

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15
Q

What does TRID stand for? What is it for?

A

Tila-Respa Integrated Disclosure. This is the Loan Estimate (LE), Intent to Proceed (ITP), and Closing Disclosure (CD)

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16
Q

What does ITP stand for? What is it for?

A

Intent to Proceed, part of TRID. Validates the Borrower’s acceptance of the terms and fees provided

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17
Q

What does LE stand for? What is it for?

A

Loan Estimate, part of TRID. Issued <= 3 business days after the Application is triggered. Must be disclosed prior to obtaining any supporting documentation or fees.

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18
Q

What does CD stand for? What is it for?

A

Closing Disclosure, part of TRID. Must be received by the Borrower <= 3 business days prior to closing. Contains the final terms and fees of the loan.

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19
Q

What is the full name of the loan application and the form name?

A

Uniform Residential Loan Application, aka 1003 (ten-oh-three)

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20
Q

What does DTI stand for? What is it?

A

Debt to Income (Ratio), Expenditures vs Income. Comprised of the Front End Ratio and Back End Ratio. An acceptable DTI is required to secure a mortgage loan.

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21
Q

What is the Front End Ratio of the DTI?

A

Housing Expense / Income

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22
Q

What is the Back End Ratio of the DTI?

A

Total Monthly Expense (including Housing Expense) / Income

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23
Q

What are the 5 C’s of Credit Lending?

A

Character, Capacity, Collateral, Capital, Conditions

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24
Q

What is the BSO form (in Encompass)?

A

Borrower Summary Origination Form

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25
Q

What does LTV stand for? What is it composed of?

A

Loan to Value, the value of the loan vs the value of the property

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26
Q

What does VOE stand for?

A

Verification of Employment

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27
Q

What does CIC stand for? What does a CIC signify?

A

Change in Circumstance. This signifies that key loan terms have changed. Can be triggered by new requests or information from the Borrower, by an extraordinary event (act of God, war etc.) beyond the control of any interested party, or other*. Cannot be used to correct a mistake by the Lender.

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28
Q

True or False: FHA loans are for a Primary Residence only.

A

True

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29
Q

Who can qualify for a VA loan?

A

Veterans and Surviving Spouses

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30
Q

When is MIP paid?

A

Upfront & Monthly

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31
Q

What type of loans have more strict credit criteria but have lower costs and monthly payments?

A

Conventional loans

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32
Q

What type of loans have lower down payments but higher monthly costs and fees?

A

FHA loans

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33
Q

What are the benefits of the Secondary Mortgage Market for a Lender?

A

Enables Lenders to make new loans, increases funds available for new loans, reduces overhead (not servicing the loan), reduces risk to the lender (passed on to the Servicer)

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34
Q

What are the Secondary Mortgage Market Risks?

A

Borrower Default, Interest Rate (changes)

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35
Q

What is a Correspondent Lender?

A

Originate, Underwrite, and Fund Loans, then sell the Loans to a larger lender

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36
Q

Who determines the Interest Rate for a Correspondent Lender?

A

The larger lender (who purchases the loan from the Correspondent Lender)

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37
Q

What are the 3 types of lenders? What is preferred to and why?

A

Correspondent (preferred, pass risk on to larger lender), Portfolio (not preferred, increased risk), Broker

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38
Q

What is Earnest Money?

A

Initial deposit made on a purchase transaction

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39
Q

What is the Borrower’s contribution to meet LTV requirements also known as?

A

The Down Payment

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40
Q

What are remaining available funds after Down Payment, Prepaids & Closing Costs also known as?

A

Post Closing Reserves

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41
Q

What is used to cover the Borrower’s cash to close? What does it consist of?

A

Assets, consists of Earnest Money, Down Payment, Prepaids and Closing Costs, and Post Closing Reserves

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42
Q

What are Prepaids & Closing Costs?

A

Escrows & Fees associated with the loan

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43
Q

What does an Appraisal determine?

A

Determines the condition, quality, and value of the subject property

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44
Q

What are appraisals based on? Who performs an Appraisal?

A

Based on recent comparable sales, completed by a licensed appraiser

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45
Q

What document provides key information regarding the subject property?

A

Title Commitment

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46
Q

What information is included in the Title Commitment?

A

The Owner of Record, information on tax amounts and due dates, Liens (mortgages, mechanics liens, tax liens, judgments)

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47
Q

Who does Mortgage Insurance Protect?

A

The Lender (in case of default by the Borrower)

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48
Q

What funds are placed in an Escrow Account?

A

Funds to cover Real Estate Taxes, Homeowners Insurance, and Flood Insurance

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49
Q

What does IRRRL stand for?

A

Interest Rate Reduction Refinance Loan, aka Streamline

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50
Q

What information is received by the Lender when the Application is Defined?

A

Borrower’s Name, SSN, the Subject Property Address, the Estimated Property Value, the Mortgage Loan Amount, and the Monthly Income Figure

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51
Q

What is the day the Loan Application is Triggered also known as?

A

Day Zero

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52
Q

When must the Loan Estimate be received by the Borrower?

A

Day Three

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53
Q

What are the available Disclosing Methods?

A

Blend eSign, SECUREMAIL, US Mail, Other (in person/fax)

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54
Q

What is Econsent necessary for?

A

Required for a Borrower to do business electronically, either via Blend Disclosures or via SECUREMAIL

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55
Q

What information is on the LE, page 1?

A

General Information, Loan Terms, Projected Payments, Costs at Closing

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56
Q

What types of Variances are there for Closing Costs?

A

Zero Variance, 10% Variance, Unlimited Variance

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57
Q

What are included in Zero Variances?

A

Origination Costs, Services You Cannot Shop For (Appraisal Report, Credit Report, Flood Certificate, MIP etc), Transfer Taxes, Lender Credits

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58
Q

What are included in 10% Variances?

A

Services the Borrower did shop for (Lender’s Endorsements, Lender’s Title Insurance, Settlement Fee) and Recording Fees

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59
Q

What are Unlimited Variances?

A

Prepaids, Escrow Payment at Closing, Services Borrower Could Not Shop For (Title Companies Not on Settlement Service Provider List)

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60
Q

True or False: Lender omitted fees, oversights, and typos are valid Change in Circumstances?

A

False: CIC does not cover mistakes by the Lender in the key loan terms

61
Q

What are the most common Change in Circumstances?

A

Borrower requested changes to loan terms, Interest Rate locks

62
Q

Other than changing or inaccurate information from the Borrower, new information such as repairs, an Act of God, what types of circumstances trigger a CIC?

A

Boundary disputes, Flood insurance, Environmental Issues (aka Other circumstances)

63
Q

If a CIC occurs, how soon must it be disclosed to the Borrower?

A

Within 3 business days of change. Date of Change = Day Zero.

64
Q

For Refinance Loans, how many day after closing can the Borrower Rescind the Transaction?

A

Up to 3 days. The loan funds on Day 4.

65
Q

For Refinance Loans, who must receive the CD?

A

All Borrowers AND non-borrowing title holders

66
Q

What information is on the CD, page 1?

A

General Information, Loan Terms, Projected Payments, Costs at Closing

67
Q

Who is the Loan Investor?

A

The Larger Lender who will purchase the loan from the bank

68
Q

What is the Loan Program?

A

Fannie Mae, Freddie Mac, FHA, VA

69
Q

The Title and Tax Cert effective dates expire by the lesser of what?

A

90 days, 60 days for a FAMC loan, or as specified on the commitment(?)

70
Q

In regards to the Loan Policy Amount vs the Total Loan Amount, what is special for FNMA, US Bank, Franklin American, CMG, and Sprout?

A

The amounts must match exactly

71
Q

In regards to the Loan Policy Amount vs the Total Loan Amount, which value can be greater (except for designated Investors)?

A

Loan Policy Amount can be equal or greater than the Total Loan Amount

72
Q

What should the Mortgagee Clause show?

A

The Bank* ISAOA/ATIMA

73
Q

What does ISAOA/ATIMA stand for?

A

Its Successors And/Or Assigns As Their Interests May Appear

74
Q

True of False: The CA orders Title Reports

A

False, but the CA may request a revision

75
Q

What 3 documents MUST have the Borrower’s name entered 100% correctly (no omitted initials)?

A

Title, BSO, CPL

76
Q

What is Title Insurance for?

A

Protects Lenders & Owners from damages due to Defects in the Title

77
Q

When is Title Insurance paid?

A

One time premium, at closing

78
Q

What does PUD stand for?

A

Planned Unit Development

79
Q

In regards to Appraisals, what would “Subject To” signify?

A

A Final Inspection is required. Signifies repairs or improvements were outstanding at the time of the Appraisal and a Final Inspection is required to verify they are complete before Closing.

80
Q

Who can order a Final Inspection? Who is most likely to order a Final Inspection?

A

CA, UA, or JA can order. CA is most likely to order (90% of the time)

81
Q

When is Flood Insurance Certificate required?

A

Always

82
Q

When types of zones require Flood Insurance?

A

Zones A and V

83
Q

True of False: Deductions from pay must be accounted for when calculating Income.

A

False. Gross Income is used.

84
Q

What information is displayed in Encompass at the top of the Loan page?

A

Borrowers (in drop down), Address, Loan #, Loan Amount, LTV, DTI, Interest Rate, Lock Info, Est Closing Date, Assigned Bank Team Members

85
Q

Where in Encompass is the BSO?

A

Loan Tab, Forms

86
Q

Where in Encompass is the Appraisal?

A

eFolder, Appraisal Folder

87
Q

Where on the Appraisal Form is the Appraised Value?

A

Reconciliation page (for Freddie Mac form)

88
Q

What does PIN stand for?

A

Parcel Identification Number

89
Q

What 3 items complete the Title Report?

A

The Title Commitment, The Closing Protection Letter, and Wiring instructions

90
Q

What types of Defects (Errors, Omissions, Complications) can appear on a title?

A

Additional claims of ownership, Improperly recorded documents, Fraud, Forgery, Liens, Encroachments, Easements

91
Q

When reviewing Schedule A on the Title Commitment, what does the Vesting information need to match?

A

The 1003 (Uniform Residential Loan Application)

92
Q

How can a spelling mistake be corrected on a Title Commitment?

A

Order a QCD

93
Q

What does QCD stand for? What loans does it apply to?

A

Quit Claim Deed. Used for Refinances only

94
Q

What information is found in Schedule A of the Title Commitment?

A

Commitment Date, Loan Type (Purchase or Refi), Proposed Policy (loan) amount, The Mortgagee Clause, , Vesting name, Trust info (if applicable)

95
Q

If the purpose of a loan is to Refinance, what will be in Schedule A of the Title Commitment?

A

The Owner will be referenced (because they already Own the property and are Refinancing

96
Q

What information is found in Exhibit A of the Title Commitment?

A

The county and PIN

97
Q

What information is found on the Tax Certificate?

A

Number of Installments, Amounts, Due Date(s)

98
Q

True or False: Approved Title Companies vary from State to State

A

True

99
Q

What 2 documents confirm the Approved Title Companies?

A

Title Company State License Matrix, Bank Approved Title Company List

100
Q

Where can Wire Instructions be found?

A

Encompass > eFolder > Wire Instructions

101
Q

What type of insurance covers damage from a catastrophic event?

A

Homeowners Insurance

102
Q

Other than damage from a catastrophic event, what else does HOI do? What doesn’t it include?

A

Provides funding to repair/rebuild, includes liability protection for homeowners. Doesn’t cover Flood, Hurricane, Wind & Hail.

103
Q

True or False: HOI is required for all Bank mortgages

A

True. Bank won’t issue one without it.

104
Q

What does RCE stand for?

A

Replacement Cost Estimate

105
Q

Why would the RCE be less than the value of the property?

A

RCE is the cost to repair/rebuild. Property value includes the value of the land.

106
Q

What’s the difference between HO6 Hazard Insurance and Project Master Insurance?

A

HO6 is for individual units (Walls In), Project Master Insurance is for the Building and Common Areas (Walls Out).

107
Q

HO3 and HO9 Policies are for what types of properties?

A

1-4 Unit Properties

108
Q

For a purchase, when should a HOI policy be effective from?

A

On OR Before the Closing Date

109
Q

For a Refi, when should a policy be effective for?

A

> 60 days of closing (make sure it won’t expire in that time)

110
Q

True or False: All properties are in a flood zone

A

True. Only properties in A and V need Flood Insurance

111
Q

True or False: For a Refi, the Total Loan Amount can be less than the Loan Policy Amount

A

True. The Loan Policy Amount can be equal or greater than the Loan Amount (Total Loan Amount)

112
Q

What is the correct Mortgagee Clause Address?

A

The Federal Savings Bank ISAOA/ATIMA
300 North Elizabeth Street, Suite 3E
Chicago, IL 60607

113
Q

What is the Preliminary Closing Disclosure also known as?

A

The Title Invoice

114
Q

In most cases, the HOI Deductible is limited to what % of the Dwelling Coverage? What document contains specifics?

A

5%, Investor Overlay

115
Q

True or False: The Subject Property Address does not need to match the BSO for the Closing Protection Letter

A

False: The Subject Property Address MUST match at all times (punctuation excepted)

116
Q

True or False: If the Title Commitment is missing the middle initial of the Borrower, the Banker can remove the initial and a QCD won’t be necessary

A

True: However, the Borrower could request the initial is retained

117
Q

True or False: Wiring Instructions need to contain one of the following; Borrower Name, Property Address, or Loan Number

A

False. As long as the routing and account numbers appear to be valid (no missing numbers replaced with XXXX), the Wiring Instructions are valid

118
Q

What does ULD stand for?

A

Underwriting Loan Decision

119
Q

Where can Subordinate Financing information be found?

A

1003 form, page 3

120
Q

Where can you request an updated Flood Certificate?

A

Encompass, TQL Services, CoreLogic Flood Certificate

121
Q

True or False: The Title does not need the Full Mortgagee Clause

A

True: The Title does not need the address, just The Bank ISAOA/ATIMA

122
Q

What documents require the full Mortgagee Clause (with address)?

A

The CPL and any Insurance

123
Q

What is the first Encompass Milestone? Who is responsible for it?

A

File Started, Banker/Jr Banker/Asst Banker

124
Q

What Encompass Milestone triggers CA involvement?

A

Underwritten

125
Q

Which Milestone does the Underwriting Analyst complete?

A

Send to Processing

126
Q

Ordering Third Party Items takes place as part of which Milestone? Who is responsible?

A

Submit to LQA JA, LQA is responsible

127
Q

What items are part of the File Started Milestone?

A

Complete Loan Application, Qualify the Borrower, Select Investor, Price the Loan, Pitch, Set Borrower Expectation

128
Q

What 5 items are part of the Submit to LQA JA Milestone?

A

Assist Sales, Assist UA, Retrieve Signed Disclosures, order and track Third Party Items (Appraisal, VOEs, Credit Supplements), Review file for completion

129
Q

What items are part of the Send to Processing Milestone?

A

Review & Analyze docs, Calculate Income, Re-run AUS, follow Guidelines and Overlays, Complete QC Review of Sales Submission, Submit file to Underwriting

130
Q

What are the four Underwriting Decisions?

A

Clear to Close, Approved w/Conditions (precedes CTC), Suspended, Denied

131
Q

What does the Closing Analyst do after the Underwritten Milestone is complete?

A

Begin Review and Closing Preparations, Review Invoices and Request Closing Disclosure

132
Q

What does the Closing Analyst do for the Approval Milestone?

A

Confirm closing date and time, Address all at closing/at funding conditions, Submit file to closing 48hrs prior to closing date/time

133
Q

True or False: A Title Commitment for a purchase will have an Owner’s Policy and a Loan Policy amount.

A

True. A Refi will not have an Owner’s Policy.

134
Q

True or False: For Purchase, the Title Vesting name(s) will be for the Borrower.

A

False. For a Purchase, the Vesting name(s) will be for the Seller. For a Refi, the Vesting name(s) will be for the Borrower.

135
Q

What type of loan would not have a DTI?

A

Streamline Refinance (because the DTI would have been established previously)

136
Q

How can the CA obtain a Processor’s Cert for HOI?

A

Call the insurance company to confirm HOI policy was paid, then print out a Custom Form from Encompass

137
Q

When is a Disaster Cert needed?

A

When the subject property is in a FEMA Disaster Zone and the Appraisal occurred before the Disaster.

138
Q

Where can you find when an Appraisal will expire?

A

The ULD will note the Appraisal Expiration

139
Q

True or False: An HOI Invoice that shows payment is still due is not acceptable for proof of insurance

A

False: An Invoice is acceptable, but this becomes a condition at closing, the insurance premium would be due at closing

140
Q

What are the 3 types of Closing Disclosures?

A

Preliminary Closing Disclosure (Title Invoice), Initial Closing Disclosure, Final Closing Disclosure

141
Q

How long before closing must the Initial Closing Disclosure be signed?

A

3 days prior to closing. Day signed is Day 0, can close on Day 3.

142
Q

Why do we need a Preliminary Closing Disclosure?

A

The Title Fees are here. CA updates 2015 Itemization Form.

143
Q

True or False: If the Title Commitment is missing the PIN, a QCD is needed to correct this.

A

False. An updated Title is needed, but not via a QCD.

144
Q

True or False: The Borrower’s Name(s) must be spelled exactly correctly on the Prelim CD/Title Invoice

A

False: The Title Fees are the main thing, so name/address typos are ok. This is an internal doc.

145
Q

What triggers the Resubmission of a loan? Who does this? What should come next?

A

Closing conditions are met, the UA Resubmits the loan to the Underwriter so it can be CTC. Once the Underwriter confirms the conditions, the loan is Approved.

146
Q

What does the 2015 Itemization have a direct correlation to?

A

Cash to/from the Borrower

147
Q

True or False: You cannot change the 2015 Itemization fees when a file is in Submittal/Resubmittal

A

False. You can change fees but you MUST inform the UA. The UW will be comparing the 2015 Itemization info against AUS and if you change it without informing the UA, the UW will be PISSED OFF!

148
Q

When is a QCD signed?

A

At closing

149
Q

True or False: Tax installments collected at closing are not entered into the Aggregate Setup.

A

False: They’re entered for the following year. So, if an installment for 02/15/2021 is collected at closing, 02/15/2022 is entered into Aggregate.

Mortgage Stuffs (1 decks)

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