National Component Test PRACTICE EXAM #2

Question 1

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?

Answer 1

25%

Question 2

A borrower should expect to provide federal tax returns and W-2 forms for how many previous years?

Answer 2

2

Question 3

When can the real estate taxes be disregarded for the purpose of determining debt ratios?

Answer 3

Real estate taxes can never be disregarded when determining debt ratios

Question 4

A Chapter 7 bankruptcy could show on a credit report for a maximum of how many years?

Answer 4

10

Question 5

What is the required cash investment the borrower must make to be approved for an FHA loan?

Answer 5

3.5%

Question 6

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.

Answer 6

Three

Question 7

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?

Answer 7

10

Question 8

For a contract to be valid, it must contain all the following elements EXCEPT:

Answer 8

Legal object
Competent parties
Mutual consent
EXCEPT: Monetary consideration

Question 9

When calculating the debt ratio, the calculation that best represents the front ratio is monthly:

Answer 9

Housing debt divided by gross monthly income

Question 10

Which of the following statements is true about a full documentation loan?

Answer 10

Both income and assets are disclosed and verified

Question 11

Which of the following forms is known as form 1003?

Answer 11

Uniform Residential Loan Application

Question 12

For a sole proprietorship, income, expenses, and taxable profits are reported on:

Answer 12

Schedule C on IRS form 1040

Question 13

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.

Answer 13

7

Question 14

In determining an applicant’s qualifications, rental income can be documented from:

Answer 14

Schedule E and a federal ta return for the past tow years

Question 15

After obtaining the initial application, a loan officer’s next step is usually to:

Answer 15

Obtain a credit report

Question 16

Which of the following information is NOT found on a loan application?

Answer 16

NOT FOUND: Finance charges for the loan

FOUND:
Applicant’s income
Rate of interest for the loan
Prepaid items

Question 17

A co-borrower’s information is required to be recorded in a loan application form when the:

Answer 17

Income of the co-borrower is used for loan qualification

Question 18

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?

Answer 18

As soon as any probationary period with the employer expires

Question 19

The appraisal approach in which the replacement value is calculated is the:

Answer 19

Cost approach

Question 20

What is NOT one of the factors underwriters consider in the decision whether to grant the mortgage loan?

Answer 20

NOT: Cause

Factors:
Capacity
Character
Credit

Question 21

Section 502 loans are a program of which government entity?

Answer 21

USDA Rural Development

Question 22

When the originating lender sells the rights to collect the payments, including interest, to another lender, the price charged in the sale is called:

Answer 22

A service release premium

Question 23

After a loan is sold in the secondary market, the originating lender may be required to repurchase the loan due to:

Answer 23

A buyback agreement