Mortgage Loan Origination Activities

Joan Johnson is a salesperson who is paid 100% commission. What type of documentation would you ask her to provide as proof of her income for loan qualification? a. W-2s for the past two years and a copy of her last pay stub b. Tax returns for the past two years c. Her tax return from last year d. A detailed verification form from her employer

B

Mr. Bob Brown earns $12.00 per hour and works 38 hours each week for his job at a retail store. His wife Matilda is paid $680 bi-weekly as a medical technician. What is their combined monthly qualifying income? a. $3,553.33 b. $3,449.33 c. $3,336.00 d. $3,940.00

B

Payment calculations for a qualified mortgage are based on: a. The maximum interest rate that may apply during the loan term b. The maximum interest rate that may apply during the first five years of the loan term c. The maximum interest rate that may apply during the first year of the loan term d. The maximum interest rate that may apply during the first ten years of the loan term

B

The Uniform Residential Appraisal Report is commonly known as the: a. 1003 b. 1004 c. 1040 d. 4506

B

Which of the following best describes the LTV ratio? a. It is the ratio of the borrower's total debt to monthly income b. It is the ratio of the borrower's principal loan balance to the appraised value of the property c. It is the ratio of the borrower's monthly loan payment to the principal loan balance d. It is the ratio of the borrower's monthly housing expense to monthly income

B

Which of the following is available to a borrower when the subject property is located in a flood zone and flood insurance is required? a. FEMA's National Flood Insurance Provision b. FEMA's National Flood Insurance Program c. State Flood Insurance Agency d. FEMA's Nationwide Flood Initiative Program

B

A borrower has applied for a refinance on her property valued at $235,000. She currently has a HELOC with a $47,000 limit and currently owes $25,850. The borrower has applied for a first mortgage of $164,500. Which of the following LTV, CLTV, and HLTV are accurate based on this information? a. 70% / 80% / 95% b. 70% / 83% / 100% c. 70% / 81% / 90% d. 75% / 80% / 91%

C

A borrower is obtaining a refinance through a lender who requires payment of PMI on first lien mortgages with loan-to-value ratios over 80%. The property is valued at $221,000, and the borrower has a HELOC with a balance of $46,000. The borrower has applied for a first mortgage of $175,000, with a 15-year fixed rate of 6.50%. Which of the following statements is correct? a. The LTV is 100% b. The lender will require mortgage insurance c. The lender will not require mortgage insurance d. The LTV is 90%

C

A property is valued at $342,000. There is a first and second mortgage with an 85% CLTV. The second mortgage has an 8% LTV. What is the approximate amount of the first mortgage? a. $263,340 b. $273,680 c. $266,750 d. $259,920

A

Appraisals that use the sales comparison approach include which of the following? a. Comparison of value for three similar, recently sold properties b. An analysis of what it would cost to rebuild the property c. Review of recently-listed real estate prices within a specific geographic area d. Comparison of the national average home value against the subject property

A

In which of the following transactions must the CFPB's "Your Home Loan Toolkit" booklet be provided? a. A home purchase b. A reverse mortgage origination c. A refinance transaction d. When a borrower applies for subordinate financing

A

James Smith has worked for Perfect Transmission Installers for eight years. His annual base salary is $52,000. For overtime hours, which he has averaged as six hours per week, he receives double pay based on his per-hour wage of $25. James takes four weeks of paid vacation per year. What is his monthly qualifying income? a. $5,533.33 b. $5,650.00 c. $5,353.33 d. $5,300.00

A

The loan processor indicates that a 1003 cannot be submitted until the Government Monitoring section is completed. Which of the following would be provided in this section of the 1003? a. Borrower's race, gender, and ethnicity b. Borrower's name c. Age and years of schooling of the borrower d. Type of mortgage and its term

A

The ratio of the total balance of all mortgage liens against a property to the value is called: a. CLTV b. TLTV c. HLTV d. LTV

A

A borrower would be required to receive a CHARM booklet and ARM disclosures for all but which of the following scenarios? a. Following application, a borrower chooses an adjustable-rate loan product b. A borrower chooses a fixed-rate loan with a 15-year term c. A borrower floats in order to obtain the best interest rate but finally decides to lock in with a 3/1 ARM d. During the loan processing period, the borrower switches from a 30-year fixed- rate to a 5/1 ARM

B

A couple has qualified for a $245,600 loan. They are told that the broker fee will cost two points. What is the dollar amount of the broker fee? a. $491.20 b. $4,912 c. $49,120 d. $49.12

B

Why would a borrower pay discount points in conjunction with his/her loan transaction? a. They would be used to pay closing costs b. They would lower their note rate c. They would compensate the mortgage broker for its services d. They would increase monthly payments but decrease the amount of interest owed

B

A property is valued at $495,000. There is a first and second mortgage with a 90% CLTV. The first mortgage has a 78% LTV. What is the approximate amount of the second mortgage? a. $49,500 b. $445,500 c. $59,400 d. $54,900

C

According to conforming guidelines, an appraiser may make net adjustments to comparables up to ____ in a residential appraisal. a. 25% b. 20% c. 15% d. 10%

C

In order for a home loan to be a qualified mortgage, the debt-to-income ratio may not exceed: a. 28% b. 36% c. 43% d. 46%

C

In which of the following instances would a borrower be required to obtain flood insurance? a. The lender determines it will require flood insurance on all conforming loans b. The borrower feels more secure having the additional coverage c. The appraiser indicates the property is located in a flood zone d. The previous owner had a history of the property flooding

C

On which approach do appraisers place the most weight in reaching a value conclusion for conforming loans? a. Cost approach b. Income approach c. Sales comparison approach d. Assemblage

C

The cost approach to appraisal includes which of the following? a. A comparison of the national average for sales of similar properties b. A value comparison with several comparable properties c. The value of the lot plus the replacement cost of the improvements d. Analysis of revenue generated by the property

C

The process of allowing a broker to originate and close a loan in his or her own name before transferring the loan to the lender providing the funds is called: a. Dry settlement b. Wet settlement c. Table funding d. Securitization

C

Title insurance is required for all loans by the: a. Borrower's attorney b. Lender's title company c. Lender d. Borrower

C

VA loans require a funding fee under all of the following conditions, except: a. The veteran makes a 10% down payment b. The veteran is using his eligibility for a second time c. The veteran is disabled d. The veteran is using his eligibility for the first time

C

When determining whether a potential borrower has sufficient income and assets to afford a mortgage loan, the lender may never rely on: a. Alimony or child support b. Commission-based income c. Equity in the property securing the loan d. Verified annual bonuses

C

Which of the following pieces of personal information is a borrower asked to provide voluntarily on the loan application? a. Marital status and age b. Sex and childbearing plans c. Race, ethnicity, and sex d. Race, age, and marital status

C

A borrower asks for the definition of "a point." Which of the following best describes what a point is in a mortgage transaction? a. It is the incremental measurement used for ARM adjustments b. It is an incentive earned by loan originators for locking a certain interest rate c. It is the mathematical conversion of a finance charge to APR d. It is 1% of the loan amount; points are paid to reduce the rate

D

A property is valued at $295,000. There is a first and second mortgage with a 77% CLTV. The second mortgage has a 10% LTV. What is the approximate amount of the first mortgage? a. $256,650 b. $227,150 c. $204,435 d. $197,650

D

An agreement a borrower makes with a lender allowing their interest rate to rise or fall with the market is called: a. A lock-in agreement b. A variable-rate disclosure c. An adjustable-rate contract d. A float agreement

D

Bankruptcy information will remain on a consumer's credit report for: a. Two years b. Five years c. Seven years d. Ten years

D

Mortgage insurance premium: a. Is paid on all conventional loans with an LTV greater than 80% b. Is required on all FHA loans until 20% equity position c. Can be cancelled after five years as long as the equity position is less than 20% d. Is paid upfront on all FHA loans

D

Mr. Cyril Cagney is paid $1,800 semi-monthly. What is his monthly qualifying income? a. $3,900 b. $3,800 c. $3,700 d. $3,600

D

PMI is used to serve what purpose? a. To cover the cost of settlement services b. To lower the interest rate for the period during which PMI is paid c. To finance a funding fee for a borrower who does not wish to pay upfront d. To cover the risk of lending to a consumer without a sufficient down payment

D

Sue Johnson is a receptionist for a construction company. She receives bi-weekly pay in the amount of $1,153.85. What is her monthly qualifying income? a. $532.55 b. $1,153.85 c. $2,307.70 d. $2,500.00

D

The DTI standard for an FHA loan is _____, and the standard for a VA loan is ____. a. 26%/38% b. 31%/43% c. 41%/43% d. 43%/41%

D

The VA guarantee covers up to what amount of the of the veteran's entitlement? a. 25% coverage b. Four times the amount of the loan c. Half the amount of the loan d. Four times the amount of the veteran's entitlement

D

The disadvantage of holding an interest in property as a leasehold instead of holding it in fee simple is that: a. Under a leasehold agreement, the consumer may not occupy the property as a renter b. A leasehold agreement can only secure an interest in property for a short period of time c. A leasehold agreement cannot be sold d. Holding property as a leasehold does not give the consumer unconditional power of disposition of the property during his/her life and the ability to pass the property onto his/her heirs

D

What document would an underwriter rely on for detailed information concerning the collateral for a mortgage loan? a. The borrower's asset statements b. The URLA c. The borrower's employment documentation d. The property appraisal

D

Which of the following does a lender use to analyze a borrower's financial capacity to determine if he/she is able to afford a loan? a. LTV b. CCPA c. CIP d. DTI

D

Which of the following real estate appraisal approaches considers the value of the property and any improvements made? a. Market approach b. Sales approach c. Income approach d. Cost approach

D

Which of the following would not be found on a credit report? a. Information available in public records b. Derogatory credit information c. Credit balances relative to available credit d. Payments made to creditors who do not send data to a repository

D

Why would a mortgage lender analyze a borrower's credit capacity? a. To ascertain the maximum loan for which the borrower qualifies b. To determine the borrower's financial liquidity c. To ascertain the amount of revolving credit for which the borrower has been previously approved d. To determine if the borrower is financially capable of repaying the loan

D

Your borrower does not wish to complete the demographics questions in the Government Monitoring section of the 1003. What should you do? a. Refuse to take the application b. Tell the borrower his/her loan cannot be funded until the information is obtained c. Leave the section blank d. Indicate that the applicant chooses not to disclose and then complete the section based on a visual observation of the borrower during a face-to-face application

D