Mortgage Loan Origination Activities Flashcards

1
Q

The mortgagee is the:

A

Lender.

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2
Q

An insurance policy that protects the lender against potential loss caused by the borrower’s mortgage payment default is called:

A

Mortgage Insurance.

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3
Q

An appraisal approach that is determined by prices paid for similar properties in the neighborhood is called:

A

Comparable Approach.

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4
Q

Mortgage Loan Originator Rob Macioce has ordered a credit report for a young married couple who have applied jointly for a mortgage loan. The credit scores of the applicants are: Borrower – 725, 705, 753 Co-borrower – 625, 685, 667 Based on the above information, per FNMA conforming guidelines, what is the representative credit score for this couple?

A

667

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5
Q

The FNMA form “1003” is the nickname of which of the following mortgage industry document?

A

Uniform Residential Loan Application

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6
Q

What is included in the 1st ratio (front ratio) calculation?

A

Hazard insurance premiums

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7
Q

Ms. Victoria receives child support payments of $2000 each month. Per FNMA guidelines, what amount of income should be allowed for monthly qualifying income?

A

$2,500

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8
Q

Liquid assets are cash on hand or any tangible or intangible item that can be converted quickly and easily into cash, typically without losing much of their value. Liquid assets typical include all the following except:

A

Equity in a Real Estate investment

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9
Q

Private mortgage insurance (PMI) is not required when:

A

The loan has been paid down to less than 78% of the property’s original purchase price.

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10
Q

The borrower is purchasing a home for $534,500.00. He is requesting an 80% LTV. The interest rate is 5.875% fixed rate for 15 years. The closing date is June 23. How much pre-paid interest will the borrower have to pay at closing? (365-day calendar).

A

$550.60

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11
Q

Flood insurance coverage is required for all residential buildings on the mortgaged premises if any part of the structure is located within a Special Flood Hazard Area (SFHA). Which of the following flood zones require flood insurance?

A

Zones A or V

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12
Q

What is the written promise by the borrower to pay the debt owed to the lender under mutually agreed conditions?

A

Promissory Note

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13
Q

The net and gross adjustment theory analyzes each of the dollar figure adjustments made in the entire appraisal and adjustments made of the comps as well. Guidelines vary, but many lenders prefer that net adjustments not exceed:

A

15%

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14
Q

A mortgage company will approve an 80% financing on a sales price of $220,000. Taxes per year have been estimated to be $6450; the hazard insurance on the loan is 3/4% per year based on a replacement cost of $220,000, and the monthly P&I payment has been calculated to be $1,056. What monthly salary must the applicant make to qualify at 28%?

A

$6,182.14

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15
Q

The borrower is paid $12.50 per hour and works a 37.5-hour week. Utilizing the FNMA/FHLMC housing expense ratio, what is the maximum PITIA this borrower qualifies for?

A

$568.75

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16
Q

Freddie Mac defines the “Three C’s” of Underwriting as:

A

Credit Reputation, Capacity, and Collateral.

17
Q

LTV is best described as:

A

It is the ratio of the borrower’s principal loan balance to the appraised value of the property.

18
Q

FNMA uses the term “net tangible benefit” in its Selling Guide to say that borrowers must receive at least one or more basic advantages from refinancing. According to FNMA guidelines, the benefit categories include all the following except:

A

A lower interest rate offered by an Adjustable-Rate Mortgage.

19
Q

The value indicated by recent sales of comparable properties in the marketplace is called the sales comparison/market data approach. This approach is most often used for:

A

Existing Properties

20
Q

What is the name of the legal instrument in which real property is pledged by the mortgagor to the mortgagee as security for the repayment?

A

The Mortgage

21
Q

A borrower’s gross monthly income that can reasonably be expected to continue for at least the next three years is called:

A

Stable income

22
Q

Where on a credit report would you find information on collections, repossessions, foreclosures and bankruptcies?

A

Public Records section

23
Q

Thom Hulme believes the property he is purchasing was incorrectly identified as being in a Special Flood Hazard Area (SFHA) by the mortgage lender. To wave the flood insurance requirement, the Loan Officer should order an elevation certificate from whom?

A

Certified Architect

24
Q

Which of the following liabilities is not included in the borrower’s Total Debt to Income Ratio calculation?

A

Union dues

25
Q

When evaluating monthly debt, which is NOT considered?

A

credit union loan with seven payments remaining.

26
Q

Any claim, lien, charge, or liability attached to and binding on real property that may lessen its value or burden, obstruct, or impair the use of a property but not necessarily prevent the transfer of title is called:

A

Encumbrance

27
Q

Eric Paulson is purchasing a nonowner-occupied residential investment property. He has no experience as a landlord; however, he has provided a signed one-year lease agreement for $1500 per month. Eric wishes to use the rental income as qualifying income. What amount may be used to qualify Eric?

A

1,125

28
Q

Which of the following types of income would require the lender to verify there are three or more years likelihood of continuance?

A

Distributions from a retirement account

29
Q

What is the name of a mortgage loan that is secured by a pledge of real property but for which the borrower is not personally liable?

A

Non-Recourse Loan

30
Q

An applicant has requested an adjustable-rate mortgage with the lowest possible payment. After several failed attempts to explain how the adjustable-rate mortgage works, the Loan Officer realizes the applicant has no comprehension of how the loan program works. What course of action should the loan officer take?

A

Act in the best interest of the consumer and not offer the product to the borrower.

31
Q

A current and verified liability appears on an applicant’s credit report; however, it was not shown on their loan application. What would be the most appropriate course of action for the loan officer to take?

A

Request a reasonable explanation and documentation to support the explanation for the undisclosed debt from the applicant.

32
Q

An applicant has requested a refinance of a home valued at $385,000. The refinance transaction includes a HELOC with a $75,000 limit with a current balance of $40,000. The first mortgage is $175,000. What is the correct LTV, CLTV, and HCLTV for this refinance transaction?

A

45% LTV / 56% CLTV / 65% HCLTV