Mortgage Loan Origination Activities Flashcards
Credit Discrepancies
You are not a credit repair professional; you can counsel the borrower as to what should be done, but you can’t do it for the borrower
Acceptable Gift Donors
Immediate blood relative and no evidence of any repayment required
Down payment Assistance
A city, county, or state agency that will help the first time homeowner with down payment money.
How can a Loan Officer accept Applications?
In person, computer application, written application, and phone application.
Who can negotiate terms with the borrower?
Only licensed individuals.
What Disclosures are to be sent within 3 business day’s of signed application
Initial Loan Estimate (LE), Intent to Proceed, Loan Tool Kit, CHARM Booklet, Preferred Providers List, AFBA, and Homeownership Counseling Disclosure
Consummation
When the borrower is legally obligated, and the loan is funded.
Weight percentage of credit score
▪ Payment history: 35%
▪ Credit utilization (the ratio of how you are using available credit): 30%
▪ Credit history (How long you have been using your
credit accounts): 15%
▪ Credit mix: 10%
▪ New credit: 10%
Reverse Mortgage Disclosure
Explains negative amortization, no escrows included in the payment, must be 62 years of age, counseling required before application and that it is a non-recourse mortgage.
What are the Two Booklets required within three business days of application?
CHARM booklet for all ARM products and Loan Tool Kit for all purchase loans
What are the three Tolerance categories on the LE?
-Zero tolerance- If you quote a number and it is incorrect, you or the company will pay the shortage.
-10% tolerance/title insurance and recording fees - If you misquote, you are responsible for any amount over 10% of the error.
-if the borrower selects their own third-party company, you have no liability.
No Tolerance
–Any fee selected by the borrower, including Realtor fees, Attorney fees , Homeowners Insurance, and escrows.
What is a Preferred Provider List?
Under Regulation H it shows all the preferred third-party
companies, such as title, inspection companies, appraisal, and credit reporting agencies.
What are three options for delivery of Disclosures?
▪ Mail/overnight
▪ In person
▪ Digital delivery (borrower must give written approval, have the option to go back to hard copy and you must determine if they can receive disclosures digitally.
When does the Initial Closing Disclosure have to be delivered?
No less than three business days before closing
What does the Homeownership Counseling Disclosure do?
Informs the borrower they have the option to go to counseling voluntarily and how much it costs. 10 counseling agencies are to be listed.
Title Insurance & Closing
-Title insurance guarantees to the lender and the borrower that there are no liens or encumbrances against the property prior to the funding.
-The closing agent is responsible for the figures approved by the lender and explaining all of the documents to the borrower.
-The mortgage is a voluntary lien against the property with the house as collateral.
Market Approach
Three comparables that are less than a mile away from the subject property and have sold in the past six months.
“As Is” or “With Repairs.”?
As is: Needs no adjustable work and the value is as stated.
With repairs, the repairs have to completed prior to closing, and a final inspection is required. A new LE would have to be issued if the borrower is paying for the final inspection.
Flood insurance
Same rule as homeowners insurance and must be obtained if the property is in zone “A” or “V”.
Liabilities
-Any debt, including bank loans, credit cards, student loans, car loans, car leases, mortgage loans, judgments, tax liens, and alimony/child support
-If any of these have less than 10 payments left, they don’t have to be included in the payment to income ratios. (The exception is car leases)
Calculating Income
-Paid every other Friday – Pay amount, times 26 pay periods, divided by 12.
-Paid on the 15th and 30th – Pay amount, times 24, divided by 12.
Bonuses
Two-year history and the company has to indicate if it will continue. Bonus was $10,000 two years ago and $4,000 last year, you use $4,000. Bonus was $4,000 two years ago and $10,000 last year, you use $7,000; average of the two.
Interest Calculation
Principal, times interest rate, divided by 12 = monthly interest dues on the loan (use the interest rate only, no other rate).
Per Diem Interest
– Needed for daily interest that will be charged from the day of funding to the end of the month.
-Principal, times the interest rate, divided by 360 days for a conventional loan, and 365 days for a government loan.
Figuring interest rate
Divide the interest paid for the past 12 months by the principal balance will give you a rough estimate of the borrower’s present interest rate
Monthly payments
-You will not be able to calculate the payment at the test because your calculator can’t do it. You do need three numbers to calculate on a financial calculator or your computer for either a fixed rate or ARM loan:
—-Mortgage balance, Interest rate, and Term.—-
-Be careful on the test on how the question is asked: If I have a $200,000 property and I am putting the minimum down payment for an FHA loan, what is the maximum loan amount?
$200,000 x 3.5% = $7,000. Thus, the maximum loan is $193,000.
FHA loans the Mortgage Insurance Fee (MIP)
Mortgage balance times 1.75% for the upfront amount. For the yearly renewal it is mortgage balance x .85, divided by 12= monthly added to payment.
Conventional PMI
– The premium rates are determined by the loan -to
- value and the term of the loan. Factors are set by the PMI companies.
Homeowners and flood insurance
Prior to closing, the first year’s premium has to be paid, and then the premium is divided by 12, which is added to the monthly payment.
Funding
When the borrower becomes obligated on the loan. This is called Consummation.
