Segment 8 - The Mortgage Loan Application

Above 720

Excellent

Between 620 - 680

Fair

What is the most common residential loan application?

Fannie Mae's Form 1003

A term of 082$470 disclosed on a credit report would indicate a loan: - that opened on August 2nd with a monthly payment of $470. - with an $82 per month payment for 470 months. - for 82 months with a payment of $470 per month. - with an 8.2% interest rate and a principal balance of $470.

For 82 months with a payment of $470 per month

On the Loan Estimate, all fees relating to title insurance policies should be in the format of: - "Title - (item description)" - "TI Policy - (item description)" - "Title Insurance: (item description)" - "[Title] (item description)"

"Title - (item description)"

Change in circumstance

- An extraordinary event beyond the control of any interested party or other unexpected event specific to the consumer or transaction; - Information specific to the consumer or transaction that the creditor relied upon when providing the Loan Estimate and that was inaccurate or changed after the Loan Estimate disclosure was initially provided; or - New information specific to the consumer or transaction that the creditor did not rely on when providing the loan estimate.

What does Fannie Mae's Form 1003 document?

- Applicant's assets - Loan amount being requested - Size of applicant's existing debt - Other info necessary to determine financial risk

On page 3 of the Loan Estimate, the Comparisons table will document the total amount the borrower will have paid towards the loan principal at the end of __________ . - 10 years - 30 months - 24 months - 5 years

5 years

What is the highest credit score that an individual can have? - 620 - 750 - 803 - 850

850

P or 4 - Participating account

A joint account for which contractual liability cannot be determined

J

A joint account owned by both the borrower and a co-borrower

A or 3 - Authorized user

A joint account where the borrower is an authorized user, but has no contractual responsibility.

T - Terminated

A joint or cosigned account where the borrower is no longer associated with the account

Which one of the following can be rounded to the nearest whole dollar when disclosed on the Loan Estimate? - An Estimated Total Monthly Payment of $1,673.41 - A monthly Principal & Interest of $1,031.29 - A Loan Amount of $250,000.35 - Homeowner's Insurance of $175.75 per month for 1 month

An Estimated Total Monthly Payment of $1,673.41

J or 2 - Joint account

An account for which both spouses are contractually liable

S or 5 - Co-maker

An account for which the borrower is the cosigner, with no spousal relationship, who becomes liable if the primary signer (or maker) defaults

B

An account owned by the borrower

C

An account owned by the borrower as a co-borrower

I, B, C, or 1 - Individual account

An account solely for this borrower

U, 0 (zero), or 6 - Undesignated account

An account that has not yet been designated

M or 7 - Maker

An account where the borrower is primarily responsible, having a cosigner (or co-maker) with no spousal relationship to assume liability if the borrower defaults

Which one of the following is NOT one of the four choices for the Purpose line item on page 1 of the Loan Estimate? - Assumption - Home Equity Loan - Refinance - Purchase

Assumption

If a lender has issued revised Loan Estimates covering the same loan transaction, each revision must: - have a corresponding Closing Disclosure document. - be issued by a different lender and loan originator. - disclose all-new loan values from its previous revision. - be uniquely identified by appending a revision number to the loan ID.

Be uniquely identified by appending a revision number to the loan ID.

If the number 3 appears under the 90 column on a credit report, it means the account has: - been 90 days past due three times. - received three 90-day extensions. - been overdue by $90 for the past three months. - had three payments of $90 made to its balance.

Been 90 days past due three times.

Which one of the following would severely impact a borrower's credit score? - A soft-inquiry is made on the credit report - Applying for a new credit card - Being 60 days past due on a debt - Having a $0 balance on a revolving credit account

Being 60 days past due on a debt

Borrowers with higher credit scores will receive: - kick-backs on residential loan leads and referrals. - a default forgiveness feature on their loans. - better terms and interest rates on their loans. - discounts on loan originator compensation rates.

Better terms and interest rates on their loans.

DLA

Date Last Activity

On the Projected Payments section of the Loan Estimate, what is the maximum number of Payment Calculation columns allowed? - There isn't a maximum number of columns - Four - Two - Six

Four

Between 680 - 720

Good

A __________ is made by lenders, credit card companies, or other types of creditors for determining a borrower's risk before authorizing a line of credit to the borrower. - hard inquiry - soft inquiry - balance review - credit report

Hard inquiry

Below 620

Poor

RMCRs

Prequalifications and Residential Mortgage Credit Reports

What are HELOCS considered?

Revolving mortgage

X - Deceased

The borrower has been reported deceased

If a rate lock is documented as YES on the Loan Estimate, what else must be included along with the confirmation? - Instructions to the applicant on what to do once the rate lock expires - The number of hours remaining until the rate lock will expire - The date and time (in the applicable time zone) when the rate lock expires - The fee necessary to continue the rate lock if it expires

The date and time (in the applicable time zone) when the rate lock expires

Which one of the following is NOT a change in circumstances that would permit a revised Loan Estimate? - The applicant requests to add a co-borrower, including the co-borrower's income, to the loan application - The property that is subject to the Loan Estimate is damaged by a fire - The applicant decides to move forward with the loan transaction two weeks after the LE was issued - The loan originator documented the Underwriting Fee as $79.50 instead of the correct $795.00

The loan originator documented the Underwriting Fee as $79.50 instead of the correct $795.00

What do you need additionally for VA loans?

- Certificate of Eligibility (COE). - DD214 or statement of service for active duty - Amount of child care expense paid for the care of minor children - Current orders for active duty military

What do you need additionally for refinance loans?

- Copy of the deed, note, or mortgage, and the Closing Disclosure (or the older HUD-1) from the purchase of the property. - Copy of the existing survey - Payment coupon from the existing mortgage with an account number and customer service number. - Copy of the current Hazard Insurance policy, and the name and phone number of the borrower's insurance agent.

What are the rounding rules?

- Dollar amounts that end in $0.50 or more will be rounded up, and amounts that end in $0.49 or less will be rounded down. - Dollar amounts or percentages that are in whole numbers are to drop the cents or decimal points (e.g., $1,000.00 will be $1,000, and 2.00% will be disclosed as 2%). - Percentage amounts that are not whole amounts are to be disclosed up to two or three decimal places. - Any percentage amounts that are greater than three decimal places will have to be rounded to three places (e.g., 4.7549% would become 4.755%).

What do you need additionally for real estate purchase loans?

- Fully-ratified real estate sales contract, including any addenda, and a copy of earnest money check - Names and telephone numbers of all real estate agents involved in the transaction

What are the four options for the type of loans in a Loan Estimate?

- Refinance - Purchase - Construction - Home Equity Loan

What do you need for all loans?

- Social Security Number (SSN) - Most recent paystubs covering a 30 day period - W2's from the past 2 years - IRS Transcripts - Copy of current rental leases - For pension or SSI, a copy of the awards letter and evidence of receipt - For note income, a copy of the Note Receivable and evidence of receipt for the past two years - Original bank statements for all accounts covering the most recent two-month period. - List of all debts, including account numbers, balances, and minimum monthly payment amounts. - Addresses for the past two years. If the borrower lives in rental housing, the borrower must provide the name, address, and phone number of the landlord. - Divorce Decree or Separation Agreement - Check payable to the mortgage company to cover the cost of the credit report. - Picture ID or driver's license

What items cannot be rounded on the Loan Estimate?

- The Loan Amount (under subheading Loan Terms on page 1) , unless the cents amount is zero. If so, then the cents can be truncated. - The Principal & Interest under subheading Loan Terms and subheading Projected Payments. - The Prepaid Interest per day field under F. Prepaids on page 2. - The Homeowner's Insurance, Mortgage Insurance, and Property Taxes per month line items under G. Initial Escrow Payment at Closing on page 2.

An account type of MTG listed on a credit report means the account is a __________ . - management account - money to go creditor - mortgage loan - multiple transaction grant

Mortgage loan

Which one of the following is a line item that will appear in Section H. (Other) on page 2 of the Loan Estimate? - Transfer taxes - Prepaid homeowner's insurance premiums - Appraisal fee - Real estate broker commissions

Real estate broker commissions

Lenders will review a mortgage loan applicant's credit score to help them determine: - the risk that the borrower will default on his/her mortgage loan. - which consumer index to use when calculating the loan's interest rate. - if the borrower can afford to pay a higher loan commission. - the loan amount and prepayment penalty for the borrower's loan.

The risk that the borrower will default on his/her mortgage loan

How many pages are in the Loan Estimate disclosure? - Four pages - Three pages - Two pages - Five pages

Three pages

VOD

Verification of Deposit

On a credit report, the owner of the credit account will be disclosed under the __________ column. - SOURCE - STATUS - CREDITOR - WHOSE

WHOSE

Consummation

When the consumer becomes contractually obligated to the creditor. Usually occurs when the borrower signs the promissory note and other agreements such as the security instrument.