Mortgage Loan Origination

Question 1

What are the qualifying ratios for Conventional, FHA, and VA?

Answer 1

Conventional 28% 36%
FHA Loans 31% 43%
VA Loans 41%

Question 2

How is the Housing Expense Ratio calculated?

Answer 2

PITIA divided by Gross Monthly Income

Question 3

CLTV =

Answer 3

1st loan amount + 2nd loan amount / lesser of the sales price or appraised value

Question 4

LTV=

Answer 4

1st loan amount / lesser of sales or appraised value

Question 5

The Standard loan application for Fannie Mae is Form ____ and Freddie Mac is Form ____

Answer 5

• Fannie Mae Form 1003 - Uniform Residential Loan Application
• Freddie Mac Form 65

Question 6

Fannie’s automated underwriting system is

Answer 6

DU Desktop Underwriter

Question 7

Freddie’s AUS is

Answer 7

LP Loan Prospector

Question 8

Conventional loans are not insured or guaranteed by

Answer 8

a government entity

Question 9

For conventional loans when is PMI required?

Answer 9

PMI required for LTV is greater than 80%

Question 10

Appraisal Approaches

sales comparison or market approach

Answer 10

compares property being appraised with other similar properties (comparables or comps) sold recently in the same market area; best for residential properties. A min of 3 comps is required by most secondary market lenders to ensure an accurate appraisal of sufficient data.

Question 11

-cost or replacement cost approach -

Answer 11

calculates the cost of the land, site improvements, and to build the structure, any depreciation, best for relatively new construction, vacant land, and unusual or special purpose properties with a few or no comps and that do not produce income. Also used w hen evaluation the cost to replace property that was damaged due to natural disasters.

Question 12

-income or capitalization appraisal approach -

Answer 12

estimates value by analyzing current or potential revenue compared to similar properties; best for commercial or investment properties.

Question 13

Employment Documentation for self-employed is:

Answer 13

needs personal and corporate tax returns for a min of 2 years

Question 14

Employment Documentation for wage earner is:

Answer 14

should have continuous employment for at least 2 years in the same field if not changes for adv. Or special education and training acceptable

Question 15

How long must alimony, child support or separation maintenance continue to be considered?

Answer 15

alimony, child support and or maintenance do not need to be listed as sources of income if a borrower does not want them considered. Must continue 3 years

Question 16

Tax free & public assistance income may be gorse dup by what percent?

Answer 16

tax free/public assistance income may be grossed up by 25%

Question 17

What is the form for tax return transcript>

Answer 17

-4506T is for the transcript of the borrowers tax return

Question 18

How is rental income calculated?

Answer 18

-rental income is calculated at 75% to allow for vacancy loss of 25%