National Component Test PRACTICE EXAM #2 Flashcards
When filling out the loan application, a borrower that has ownership interest in the business that employs her should be marked as self-employed when that interest reaches what percentage?
25%
A borrower should expect to provide federal tax returns and W-2 forms for how many previous years?
2
When can the real estate taxes be disregarded for the purpose of determining debt ratios?
Real estate taxes can never be disregarded when determining debt ratios
A Chapter 7 bankruptcy could show on a credit report for a maximum of how many years?
10
What is the required cash investment the borrower must make to be approved for an FHA loan?
3.5%
What is the minimum number of comps required by most secondary lenders to ensure an accurate estimate of value when performing the sales comparison approach.
Three
When qualifying a borrower, an installment debt does not need to be included in the debt ratio when the balance of the term of repayment is less than how many months?
10
For a contract to be valid, it must contain all the following elements EXCEPT:
Legal object
Competent parties
Mutual consent
EXCEPT: Monetary consideration
When calculating the debt ratio, the calculation that best represents the front ratio is monthly:
Housing debt divided by gross monthly income
Which of the following statements is true about a full documentation loan?
Both income and assets are disclosed and verified
Which of the following forms is known as form 1003?
Uniform Residential Loan Application
For a sole proprietorship, income, expenses, and taxable profits are reported on:
Schedule C on IRS form 1040
The declarations section of the Uniform Residential loan Application asks about bankruptcy. An applicant must answer Yes/No about a declared bankruptcy, if it occurred during the past ________years.
7
In determining an applicant’s qualifications, rental income can be documented from:
Schedule E and a federal ta return for the past tow years
After obtaining the initial application, a loan officer’s next step is usually to:
Obtain a credit report
Which of the following information is NOT found on a loan application?
NOT FOUND: Finance charges for the loan
FOUND:
Applicant’s income
Rate of interest for the loan
Prepaid items
A co-borrower’s information is required to be recorded in a loan application form when the:
Income of the co-borrower is used for loan qualification
A borrower who has just completed a professional degree (PhD), but has no work history, would have to wait how long before adequate employment history is established?
As soon as any probationary period with the employer expires
The appraisal approach in which the replacement value is calculated is the:
Cost approach
What is NOT one of the factors underwriters consider in the decision whether to grant the mortgage loan?
NOT: Cause
Factors:
Capacity
Character
Credit
Section 502 loans are a program of which government entity?
USDA Rural Development
When the originating lender sells the rights to collect the payments, including interest, to another lender, the price charged in the sale is called:
A service release premium
After a loan is sold in the secondary market, the originating lender may be required to repurchase the loan due to:
A buyback agreement
