MLO Activities

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In order for a home loan to be a qualified mortgage, the debt-to-income ratio may not exceed:

Income derived from a rental property would be entered into the "Monthly Income and Combined Housing Expense Information" section of the URLA

Income derived from a rental property would be entered in which section of the URLA?

Small Creditors The only entities permitted to make balloon payment qualifies mortgages are small creditors. After 2016, this will be limited further to only small creditors who are conducting business in rural or underserved areas.

Balloon payment qualified mortgages may only be made by:

Fixed-rate mortgages Homeownership counseling is required for high-cost mortgages, FHA HECM loans, and negative amortization loans

Homeownership counseling is required for the following types of lending transactions, except

It is not necessary to renew

How often must a borrower renew owner's title insurance?

Car Loans Nontraditional credit includes payments for things not traditionally tracked by or reported to the credit bureaus. This includes things like rent and utility bills.

Nontraditional credit includes all of the following, except:

The Declarations section (8) asks the borrower for information regarding any judgments, citizenship, default status, occupancy status, and other questions that may affect underwriting.

On which section of the application would a borrower be asked to attest to the home serving as his/her primary residence?

The fully-indexed rate

Payments for non-qualified mortgages must be based on:

Net adjustments are 10% Net adjustments should not be greater than 15% on comparables.

The primary focus of an appraisal review is to determine whether or not the comparables are appropriate. Which of the following is not an example of something that might suggest an issue?

AUS Much of the underwriter's decision-making has now been taken over by an automated underwriting system. These are known by many names, but all do the same thing: they make automated underwriting decisions based on lender guidelines and information entered into the AUS

The system that an underwriter uses to help streamline the underwriting process is called:

Borrower's with non-taxed income are allowed to increase their earnings by 25% for qualification purposes. This means they would multiply by 125% - not increase income by 125%

The term "grossing up" means a borrower's non-taxed income is allowed to be increased by as much as:

An originator should use 5% of the remaining debt on that account as the monthly payment.

When a credit report shows only a balance on a revolving debt, rather than a payment, an originator should:

The three appraisal approaches are the sales comparison approach, the cost approach, and the income approach.

What are the 3 appraisal approaches?

The CLTV accounts for the total encumbrance on the property.

What does the CLTV account for?

Mortgage Insurance Premium

What is not required for a VA loan?

IRS W-2s, tax returns, and payroll receipts The Ability to Repay Rule requires that a borrower document his/her ability to repay the loan, using "reliable evidence" such as W-2s, tax returns, and payroll receipts.

Which of the following is considered "reasonably reliable" evidence to verify the repayment ability of a borrower?

Net Worth of Businesses Liquid assets include things like earnest money, cash, checking or savings accounts, stocks and bonds, and the cash value and face amount of life insurance policies. Non-liquid assets include things such as retirement accounts, real estate, and net worth of businesses.

Which of the following is not an example of "liquid assets"?

According to new ATR standards for consideration of borrower repayment ability, general ATR standards require a consideration of DTI ratio and residual income. However, there is no DTI ratio threshold or minimum required residual income.

Which of the following is true regarding ATR standards for consideration of borrower repayment ability?

If a loan may be categorized as a qualified mortgage, there is an automatic presumption of compliance with ATR Rule standards exists under the law.

Which of the following is true?

Wet settlement occurs when the parties to a loan transaction meet to execute documents, and afterwards, funds are disbursed.

Which of the following occurs when the parties to a loan transaction meet to execute documents, and afterwards, funds are disbursed?

A purchase money mortgage

Which of the following would be subject to the ATR Rule?

A borrower may take on a piggyback loan to avoid mortgage insurance, but not "MIP," because that is required for FHA loans. Of the answers given, the best is to limit the cash necessary to bring to the table.

Why might a borrower take a piggyback loan?