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SAFE Exam > Mortgage Loan Origination Activities (25%) > Flashcards

Mortgage Loan Origination Activities (25%) Flashcards

1
Q

The Principle of __________ states that a knowledgeable consumer will pay no more for a property than the cost of acquiring an equally desirable alternative property.

A

Substitution

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2
Q

Mortgages have __________ foreclosure and require court action to foreclose on a property.

A

judicial foreclosure

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3
Q 
Discount points (buydowns) are paid upfront to the \_\_\_\_\_\_ for lowering the interest
rate, and origination points are paid to the  \_\_\_\_\_\_\_\_ as a fee for service.
A

Lender / loan originator

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4
Q

If a property is in a flood zone, the lender will require __________ for the life of the loan.

A

flood insurance

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5
Q

Assessing an individual’s risk (underwriting) may be done manually or by the __________.

A

automatic underwriting system (AUS)

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6
Q

Commission, Overtime, Bonus, Part-time, Interest and Dividend income must be averaged over __ years.

A

Averaged over 2 years

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7
Q

Trust Deeds are __________ and do not require a court action to foreclose on a property.

A

Non-judicial

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8
Q

The note (promissory note) is the legal evidence of the _____ and is not recorded.

A

debt

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9
Q

Hazard insurance does not cover damages due to perils of ________.

A

flood

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10
Q

HCLTV stands for __________.

A

Home equity line of credit (HELOC) Combined Loan-To-Value ratio

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11
Q

If unemployment is a part of an applicants natural annual work cycle, then it can be included in their qualifying income if it has shown for the past ___ years on the borrowers tax return.

A

2

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12
Q

Late fees are due after the ____ of the month.

A

15th

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13
Q

If a borrower uses unemployment as qualifying income then the the average unemployment income from the past __ years is used.

A

2 years

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14
Q

Applications can be taken which 4 ways?

A

Face-to-face, over the phone, through the mail or over the Internet

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15
Q

The _____________________ prevents a mortgage broker from choosing the appraiser for loans that are sold to Fannie Mae. The Dodd-Frank Act extended the law to include all mortgages.

A

Home Valuation Code of Conduct (HVCC)

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16
Q

The one promising to pay the money is called the ______.

A

maker

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17
Q

A mortgage is a _________ lien; special assessments and mechanic’s liens are ______________ liens.

A

voluntary lien / involuntary liens

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18
Q

Fannie Mae requires a maximum Housing Expense Ratio of __%.

A

28%

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19
Q

The three approaches to estimating property value are the:

A
  1. Sales Comparison Approach (residential and vacant land)
  2. Cost Approach (new construction and special-use properties)
  3. Income Capitalization Approach (income producing properties)
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20
Q

The two types of documents associated with a loan are the _______ and the __________.

A

mortgage / promissory note

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21
Q

Buy down points (temporary points) shown as FHA 2-1, allow a purchaser to reduce the interest rate on a mortgage by __% for the first year, __% for the next year, and __% every year thereafter.

A

2% / 1% / 0%

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22
Q

The appraiser must be paid a ______, and not a fee based on the appraisal value.

A

flat fee

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23
Q

The income approach is most useful for __________ and __________ property.

A

income-producing commercial / investment

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24
Q

The Housing Expense Ratio =

A

PITI ÷ Gross Monthly Income

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25
Q

In the Sales Comparison Approach, the appraiser researches a minimum of __ closed sales that are similar in characteristics to the subject property.

A

3 closed sales

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26
Q

A borrower’s payment history on previous mortgages or rent must be verified for ___ months.

A

12 months

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27
Q

The underwriter is responsible for evaluating both the risk of the ________ and the ________.

A

borrower / property

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28
Q

The lender always makes the final decision to _______ a loan. The lender issues the ____________.

A

Final decision to fund a loan / Clear-to-Close

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29
Q

Monthly interest rate is calculated by

A

loan amount x interest rate ÷ 12

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30
Q

Fixed discount points gives a borrower a ______ for the life of the loan.

A

lower interest rate

31
Q

Loan consummation is the point and time that the Consumer becomes ______________ on a credit transaction. Often referred to as “doc signing” or “closing” on the exam.

A

contractually obligated

32
Q

The Income Approach Appraisal analyzes _________ or ________ the property does or could generate. Sometimes called capitalization approach.

A

revenue / income

33
Q

Origination fees are charged on _____ that close and cover ___________.

A

Loans that close / administrative costs to close/service loan

34
Q

Prorated mortgage interest paid by the borrower at closing is calculated by:

A

(loan amount x interest rate)/365 days) x number of days left in month including closing day

35
Q

Retirement and pension income must continue for __ years beyond the application date in order to be included as income.

A

3 years

36
Q

The borrower is called the ______.

A

Trustor

37
Q

FHA requires a maximum Housing Expense Ratio of ____.

A

31%

38
Q

Public Assistance Income can be considered any of the following:

A

Child support, alimony, social security income, retirement income, pension, etc.

39
Q

__________ is the most probable price a property will bring in a fair and open market.

A

Market value

40
Q

The _______ is the beneficiary who retains note and deed of trust.

A

Lender

41
Q

An appraisal is valid for __ months. It must be re-certified if the appraisal will be __ months or ___ days old or more at closing.

A

6 months / 4 months (120 days)

42
Q

Combined Loan-to-Value Ratio (CLTV) =

A

1st Mortgage + 2nd Mortgage ÷ the sales price or appraised value (whichever is lower).

43
Q

Employment income must be verifiable for the past __ tax years. Any source of income which is not verifiable is _______ to the lender.

A

2 / Not acceptable

44
Q

Annual interest rate is calculated

A

loan amount x interest rate

45
Q

Yield spread premium (or lender credits) is a tool MLOs can use to reduce a borrowers ____________.

A

settlement costs

46
Q

The Cost Approach Appraisal calculates the __________, _________ and ____________.

A

cost of land, site improvement, and construction of structure

47
Q

Daily interest rate is calculated

A

loan amount x interest rate ÷ 365

48
Q

Each discount point and loan origination point costs __% of the loan amount.

A

1% of the loan amount

49
Q

Loan-to-Value Ratio (LTV) =

A

The loan amount ÷ appraisal value or purchase price, whichever is less

50
Q

Public Assistance income is “grossed up” by _________ during underwriting because it’s non-taxable.

A

1.25 (increased by 25%)

51
Q

The VA ___________ the housing expense ratio

A

Does not consider

52
Q

AUS stands for _____________.

A

Automatic Underwriting Systems

53
Q

The one that will receive the money promised is called the ______.

A

payee

54
Q

The Fannie Mae appraisal form is called the _____________________.

A

Uniform Residential Appraisal Report (URAR) – form 1004

55
Q

To determine the highest and best use of a property, the use must be _________, ________ and __________.

A

legally permissible, physically possible and financially feasible

56
Q

When a married applicant qualifies for a mortgage based on his or her own financial capacity (without any assets or income of his or her spouse being taken into consideration), the spouse _______ need to sign the note.

A

does not

57
Q

A borrower may charge ____ for an appraisal and up to __% of the loan amount to his/her credit card to pay for lock-in fees.

A

$500 / 1%

58
Q

Points are used to lower_______ and each point will ______________ .

A

interest rates / lower the rate by 0.25%

59
Q

The Total Debt to Income Ratio =

A

PITI + other monthly debt ÷ Gross Monthly Income

60
Q

As it relates to rental income – the underwriter will only consider ___% of rental income collected.

A

75% - The other 25% is considered vacancy factor.

61
Q

Property appraisers must be licensed and adhere to the ________________.

A

Uniform Standards of

Professional Appraisal Practice (USPAP)

62
Q

The cost approach is most useful for _________ or _____________ producing property.

A

unusual or non-income producing property.

63
Q

Receipt of alimony or child support payments must continue for ___ years beyond the application date in order to be included as income.

A

3 years

64
Q

The ______ and _____ of ________ establish the lien position of the mortgage.

A

date and time of recording

65
Q

The Uniform Residential Loan Application (URLA) is also called the _____.

A

1003 or Form 1003

66
Q

Mortgage Fraud is investigated by the ____.

A

FBI

67
Q

Mortgage fraud is punishable by up to ___ years in prison and/or a fine of up to $__________.

A

30 years/$1,000,000

68
Q

The core of a loan originator’s job is to obtain a complete and accurate ____ supported by ___________ from the borrower.

A

1003/documentation

69
Q

The ___________ evaluates the documentation, borrower information, and various risk factors to make a decision.

A

Underwriter

70
Q

The ____________ orders the appraisal.

A

Loan Processor

71
Q

The ____________ will verify the information collected by the loan originator, such a s check stubs W-2 forms, copies of bank statements and other documents.

A

Loan Processor

72
Q

A _________________, also known as the ____ is the standard appraisal form used to appraise single-family homes.

A

Uniform Residential Appraisal Report / 1004

73
Q

An appraisal is valid for ___ months but must be rectified if it will be __ months old or more at closing.

A

12 months / 4 months

74
Q

After the borrower makes the down payment lenders would like to see at least enough to cover __ months’ mortgage payments of principal, interest, taxes and insurance

A

2 months

SAFE Exam (14 decks)

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