Module 2 Exam
Which step of the mortgage loan process typically involves ordering a credit report? a. origination b. underwriting c. servicing d. processing
a.
Fannie Mae and Freddie Mac guidelines generally consider those with credit scores above ___ as an acceptable credit risk and, therefore, have little interest rate adjustment. a. 620 b. 700 c. 720 d. 660
c.
Joe wants to get a loan to buy a house. When evaluating his credit obligations, which would LEAST LIKELY be considered as debt? a. child support payment b. credit card payment c. cell phone service payment d. car loan payment
c.
Karen buys a house for $200,000, making a $50,000 down payment and paying three discount points to buy down the interest rate. What is the total cost of the discount points? a. $1,500 b. $3,000 c. $4,500 d. $3,600
c.
Mary receives a monthly child support payment from her ex-husband pursuant to a Judgement of Divorce. Bob receives a monthly check because of a service-connected injury from his days in the military. John is a minister and recieves money every month for living expenses. These payments are examples of a. gross-up income. b. public assistance payments. c. nontaxable income. d. unemployment compensation.
c.
The URLA requires the borrower to provide details about all current and previous employment over a(n) a. one-year period. b. four-year period. c. two-year period. d. three-year period.
c.
The _________________ is a commitment guaranteed by lender Sue that an interest rate will not change on borrower Wade's mortgage loan for a specific period of time. a. sales contract b. Uniform Residential Loan Application c. lock-in agreement d. POC agreement
c.
To be qualified as self-employment income, the borrower must own at least what percent of the business used for qualifying? a. 10% b. 50% c. 25% d. 5%
c.
Who is typically responsible for verification of the information contained in a borrower's loan file, such as sending out employment verification forms? a. underwriter b. servicer c. loan processor d. mortgage loan originator
c.
A borrower's stable monthly income is $3,000. He has three monthly debts: $350 car payment, $50 personal loan payment, and $50 credit card payment. What is the maximum monthly mortgage payment he would qualify for on a conforming loan? a. $630 b. $390 c. $1,080 d. $840
a.
Conventional lenders consider a borrower's income adequate for a loan if the proposed total mortgage payment of PTI does not exceed ___ of stable monthly gross income. a. 28% b. 43% c. 34% d. 36%
a.
Conventional lenders do not want a borrower's total debt to income ratio to exceed ___ of stable monthly gross income. a. 36% b. 28% c. 34% d. 43%
a.
Joe buys a house for $150,000, making a $30,000 down payment and paying three discount points to buy down the interest rate. What is the total cost of the discount points? a. $3,600 b. $1,500 c. $3,000 d. $4,500
a.
MLOs ___ consider unemployment income as part of a potential borrower's monthly stable income. a. can b. cannot
a.
Section L1: Property and loan Information of the new URLA is to be completed by the a. lender b. borrower
a.
To combat income-related mortgage fraud, lenders require a review of the income provided to the IRS. What document authorizes the lender to obtain income transcripts from the IRS? a. 4506-T b. URAR c. 1003 and Verification of Income d. Schedule 15
a.
When qualifying for a conventional loan, stable gross monthly income can include a. alimony received (that a borrower chooses to reveal). b. income from other family members. c. a bonus received for the first time last year. d. erratic unemployment earnings.
a.
Which of the following is the first step in the traditional real estate mortgage loan approval process? a. consulting with the mortgage loan originator b. analyzing the borrower and property c. completing a loan application d. processing a loan application
a.
____________________ is a tool that an MLO can use to lower the upfront cash out-of-pocket expenses at closing for a borrower in exchange for higher monthly out-of-pocket payments required by a higher interest rate. a. Yield spread premium b. Lender return c. Par rate d. Points
a.
A _________ is a person who signs the promissory note along with the primary borrower and accepts a joint obligation to repay the loan. a. co-signer b. co-borrower
b.
Disability payments count as income if they are a permanent source of income, but lenders must use caution if the disability payments are only for a limited time. If the benefits have a defined expiration date, the remaining term should be at least _____ years from the date of the mortgage application. a. five b. three c. two d. four
b.
Documentation of assets includes ____ month(s) of bank statements (all pages) to verify available funds. a. four b. two c. one d. three
b.
The majority of lenders throughout the country have incorporated into their conventional loan underwriting procedures the standards set by the major secondary market investors, specificially a. RESPA. b. Fannie Mae and Freddie Mac. c. ECOA. d. the FHA.
b.
To qualify with self-employment income, the borrower must own at least ___ of the business. a. 10% b. 25% c. 5% d. 15%
b.
Total Housing Expense / Gross Monthly Income = a. Total Debt-to-Income Ratio % b. Housing Expense Ratio %
b.
____________ is the process by which a lender determines if a potential borrower can receive financing through the lender and for what amount of money. a. Pre-qualification b. Pre-approval
b.
Bob and Mary are providing a gift to their daughter, Amy, as a down payment for the purchase of her new home. They provide a current bank statement for their account, a copy of their check to Amy, and a copy of the deposit slip into Amy's account. Amy provides a current ledger from her checking account that verifies the deposit was made and the amount of the current balance. What key document is missing? a. copy of the deposit receipt from the settlement agent b. agreement signed by all parties stating when the gift is to be repaid c. letter from Amy's bank stating when the gift is to be repaid d. gift letter signed by the donor stating no repayment is expected
d.
Conventional lenders want to be sure the borrower's housing expenses, plus any installment debts with 10 or more payments left or other debt that will not be canceled, do not exceed ___ of stable monthly gross income. a. 28% b. 43% c. 34% d. 36%
d.
If a borrower is self-employed, he should provide a. profit and loss statement for the previous six years b. an average monthly income amount earned over the previous two years. c. employment verification from the last employer. d. tax returns for the previous two years.
d.
The loan _________ is typically responsible for verification of the information contained in the file and coordination of the various aspects of the loan. a. servicer b. originator c. underwriter d. processor
d.
Underwriting involves all of the following EXCEPT a. evaluating credit history. b. considering job history. c. evaluating credit scores. d. completing a title search.
d.
Which of the following is used as a commitment guaranteed by a lender that an interest rate will not change on a specific loan for a specific period of time? a. sales contract b. Uniform Residential Loan Application c. POC agreement d. lock-in agreement
d.