Loan Origination
Closing costs are those costs related to the loan EXCEPT:
prepaid items.
The Verification of Mortgage (VOM) must be provided for all existing mortgages and be sent to the underwriter by the:
processor.
You are wondering what the total amount of interest your borrowers will pay on their 30 year fixed rate loan--if they kept that loan for its full 30 years. On the TIL you calculate the Amount Financed to be $145,000. Your customers P&I payment is $975.00 per month. Based on this information, what will be the amount of interest your customer will pay over the 30 year period?
$206,000
Calculate the borrower's maximum housing payment if the qualifying ratios are 28/36, the husband's income is $48,000 per year, and the wife makes $2,500 per month?
$1,820
A bank, insurance company, savings and loan association, thrift or any lending institution whose loan is regulated by law, is usually known as
an institutional lender.
A yield spread premium occurs when:
an interest rate is charged above the par rate and is a credit to the borrower.
A fee charged to the borrower by lenders to cover such costs as preparation of documents and other services provided by the primary lender and computed as a percentage of the loan is known as:
an origination fee.
For one person to sign a legal document for another person generally would be considered forgery, unless the person signing had:
legal power of attorney.
Land is given as a separate value in which of the following appraisal methods?
Cost approach
A buyer had made an earnest money payment of $5,000. Later the buyer pays an additional $2,000 to be credited at closing on a property with a sale price of $160,000. If the required down payment is 20%, how much additional money will the buyer need to provide toward the down payment at closing?
$25,000
The borrowers want a conventional loan for a $150,000.00 new home purchase. They do not want to pay for mortgage insurance. They have enough money to put down, but want to put the minimum down required that would allow for no mortgage insurance. What amount would be needed for the down payment?
$30,000.00
A person was purchasing an income property which was scheduled to close and fund on June 25th. Rent of $1800 was paid for the month of June on the 1st. What was the buyer's proration amount?
$360
For an interest only loan of $180,000 with a 5% interest rate, how much is the dollar amount of interest for 7 months?
$5,250
The borrower is putting 10% down on a $180,000 sales price. She is paying 2.5 discount points and a 1% origination fee. What is the total of the origination fee and discount points she is paying?
$5,670
When filling out the loan application, amounts entered should be rounded to the nearest:
$50
A borrower purchases a home for $120,500 and is putting 10% down. If he has already paid $2,500 in earnest money, what is the rest of the down payment at closing?
$9,550
When would a subordination agreement be appropriate?
A first mortgage is being refinanced and doesn't want to lose priority to an existing 2nd mortgage.
How long before a discharged bankruptcy will be removed from a credit report?
10 years
COFI is an Index used in which district?
11th District
Long term debts are those that have payments remaining for more than: (please note, this question is referring to long term debts, not whether it counts toward DTI)
12 months.
How many years of employment should you document on the 1003 for each borrower?
2 years for both
How many years of residency history do you need to document on the 1003 for each borrower?
2 years for both borrowers
A borrower must provide copies of their business tax returns if they own what percent of the business?
25% or more
What is the housing ratio for a borrower who makes $24,000 a year with a payment amount of $560?
28%
Which form allows the lender to verify your client's tax returns?
4506-T
If two borrowers own property in joint tenancy, each borrower has what percent of ownership?
50%
A borrower purchasing an investment property must have how many months of payments in reserve?
6 months
When purchasing a 2-4-unit property according to FHLMC/FNMA guidelines, how many months of reserves are required?
6 months
On an FHA annually adjusting ARM, assume that the starting rate was 5%; the margin is 2.5%; the index in 6 months is 3%; the index in 12 months is 3.5%; the index in 18 months is 3.25%. What is the borrower's interest rate in 18 months? 5.00% 6.00% 5.50% 5.75%
6%
What is the note rate for a $150,000 loan with a 2/1 buy down when the borrowers start with a payment rate of 4% for 12 months; then 5% for another 12 months; then 6% for the rest of the payment term?
6%
On an FHA residence loan, the borrower must occupy the premises within how many days after closing?
60 days
Most lenders see that a credit score may raise serious questions about a borrower's willingness to repay debts if the score were lower than: 680 -699. 640-659. 700-719. 620-639.
620-639.
What is the HCLTV (HTLTV) assuming a $200,000 value, a $100,000 first mortgage loan, and a $50,000 Home Equity Line of Credit second mortgage with a drawn amount of $30,000?
75%
How is rental income calculated when the borrower owns rental properties other than the subject property?
75% of the income less the PITI. If the net is positive, include as income; if the net is negative, include as a monthly debt
Mortgage insurance is required by the lender, based on risk, credit score, length of the loan, fixed or variable and the LTV. The cost for PMI will vary, depending upon these factors. Which of the LTVs below would not be used for determining the cost of mortgage insurance? 85.01-90% 78-80.00% 80.01-85% 90.01-95%
78-80.00%
Which of the following situations would NOT require full tax returns to support a loan application? When a borrower owns other real estate with an income or loss reported A borrower on Social Security An employee with bonus income exceeding 25% of total income When a borrower is employed by a family member
A borrower on Social Security
At closing, which would not be a standard trust deed rider? An ARM rider A compliance agreement rider A planned unit development rider A graduated payment mortgage rider
A compliance agreement rider
The underwriter will require verification of employment. Which of the following will NOT serve this purpose? A notarized affidavit from the borrower Telephone call to the employer by the loan processor Paycheck stubs A written letter or completed form directly from the employer
A notarized affidavit from the borrower
Which of the following is the best comparable to use for a loan? An almost identical home, recently sold in foreclosure Three similar homes currently listed on the same street A similar home that is currently under contract A recently sold home, in the neighborhood, similar to the subject property
A recently sold home, in the neighborhood, similar to the subject property
The Acronym (ATR) stand for :
Ability to Repay
Which of the following is NOT a scoring system lenders use to evaluate credit? Equifax BEACON Trans Union EMPIRICA Altera SCORE Experian FICO
Altera SCORE
Fannie Mae would require mortgage insurance on which of the following loans? An 83% LTV conventional loan A 96.5% FHA loan An 80% LTV first mortgage and 20% LTV second mortgage equaling a 100% LTV loan A 100% VA loan
An 83% LTV conventional loan
What does a loan originator use to determine the estimated value of a property based on analytical comparison of similar property sales?
An appraisal
If a trust deed is recorded, which of the following is true?
An encumbrance is created.
When a trust deed (or deed of trust) is recorded, which of the following is true? Ownership is conveyed A lien is released An lien is created It verifies both the lender and borrower signed the document
An lien is created
PMI, or Private Mortgage Insurance, would be used for which of the following loans? FHA loans VA loans Conventional loans All Government loans
Conventional loans
What form do you give to the borrower(s) to sign that authorizes the MLO to order a credit report?
Borrowers Signature Authorization
Which of the following is true concerning title insurance?
Borrowers must pay for a lender's policy.
When the borrowers pay a fee to get a lower interest rate, but the interest rate will not remain at that level for the life of the loan, but over time will raise to the quoted fixed rate. What is this called?
Buy down fee
Which disclosure do you need for an ARM loan?
CHARM booklet
If a borrower is a commissioned employee and required to provide tax returns, how does the lender calculate income from the tax returns?
Commissioned income less schedule 2106 expenses
If a lender is processing an FHA loan and finds out that the borrower has a questionable social security number, what should be done?
Contact the Social Security Administration and resolve the question
In the Real Estate Owned section of the 1003, you need to include all of the following:
Current residence, rentals, lots, and any other real estate owned
What form is used in order to verify an honorable discharge?
DD 214
Which of the following does a standard Freddie/Fannie credit report contain? A statement regarding future credit worthiness of a borrower Credit inquiries from insurance companies Payment amounts only for reported debts Debts a person may owe
Debts a person may owe
When you order an Insurance binder on a borrower's loan file, the one-page sheet that summarizes all the insurance information is known as the:
Declaration page.
A lien is released by which of the following documents?
Deed of Re-conveyance
If the borrower is self-employed, generally speaking, what can be added to the income?
Depreciation
Under which of the following circumstances would a repurchase, or buyback, NOT happen? The borrowers never made any payments. The borrowers are in default within the first few months. During the term of the loan the borrowers were late on a few payments. he secondary lender discovered fraud in the application.
During the term of the loan the borrowers were late on a few payments.
Which of the following would NOT be a good source to establish credit history when a borrower does not have a traditional credit score? Employment history Rent history Utility ratings Insurance payment history
Employment history
The lender is requiring repairs on the home to be completed. Those repairs can be done after the loan closes by including them in a(n):
Escrow Holdback.
What do we call it when the loan will not be fully funded until further conditions are met?
Escrowed funding
UFMIP or Mortgage Insurance Premium would be used for which of the following loans? Conventional loans VA loans Secondary financing FHA loans
FHA loans
The most commonly used conventional underwriter guidelines are established by:
FNMA and FHLMC.
FmHA is the acronym for:
Farmers Home Administration.
FHLMC is the acronym for:
Federal Home Loan Mortgage Corporation.
FNMA is the acronym for:
Federal National Mortgage Association
You have a borrower that makes $21 an hour and overtime every month, what must you do to insure that you can use the overtime?
Figure his gross income and make sure he can prove overtime over two year period
When a property is located in a flood plain, the lender will require flood insurance to be in effect for how long?
For the life of the loan
When hazard insurance on the property lapses, what will the lender do?
Force placed insurance
GNMA is the acronym for:
Government National Mortgage Association
The Closing Disclosure has taken the place of what form for consummation on purchases of a Fannie or Freddie type of loan:
HUD-1 Form
In computing debt ratios, which of the following would NOT be considered? Second mortgage Car payment Hazard Insurance Health insurance premiums
Health insurance premiums
There are two ratios commonly used to qualify the buyer. What are they?
Housing ratio and total debt ratio
Under what circumstances would it be possible to consider capital gains as income for a Fannie Mae or Freddie Mac loan? If the borrowers can get written verification from their mortgage loan servicer that the income will continue If the borrowers can verify a minimum of two years income on their tax returns and still own the asset If the borrowers can verify one year income on their tax returns and get a CPA letter If the borrowers are using the asset/income as part of their down payment
If the borrowers can verify a minimum of two years income on their tax returns and still own the asset
A borrower with an FHA loan sells the property on contract and transfers the title. Under which circumstance is this acceptable? If the loan is assumable If the new borrower occupies the property If the original borrower indemnifies the lender against any losses Under no circumstances
If the loan is assumable
Which of the following is NOT true about the VOE? It must be provided for all employed applicants, and must be fully completed, signed, and dated . It must be sent directly by the processor to the employer. It must be signed by the personnel department or the borrower's superior. It can be sent electronically to the borrower to be presented to the lender.
It can be sent electronically to the borrower to be presented to the lender.
Which of the following is true concerning hazard insurance on a Freddie/Fannie loan?
It is required on all loan transactions
How does aggregate adjustment benefit the borrower?
It protects against escrow overages
Which of the following describes completely the manner in which title will be held?
Joint tenants with full rights of survivorship
Which of the following would be an appropriate entry on the 1003 if asked for the "manner" in which title will be held? Joint tenants with full rights of survivorship Tenancy for years In a bank safety deposit box Periodic tenancy
Joint tenants with full rights of survivorship
A couple wants to buy a house together and both will be using their credit and income to qualify for the loan. However they are not married. How are they applying?
Jointly but on two separate loan applications
If a borrower is self-employed and trying to get a government or conventional loan, which percentage of ownership in a business means that the borrower will not be required to provide tax returns?
Less than 25%
The lender discloses the prepayment penalty on which of the following documents?
Loan Estimate
Which of the following is not common to split between buyer and seller?
Loan origination fees
Under Section X, Information For Government Monitoring Purposes, you ask the borrower race, ethnicity and gender questions. The borrower tells you that s/he does not wish to furnish that information. In a face to face loan application, what should you do?
Make your best guess and fill in all the information.
MIP is the acronym for:
Mortgage Insurance Premium
Mortgage insurance benefits the borrower by
allowing borrowers to obtain financing with lower down payments and higher LTVs.
When obtaining hazard insurance, the lender will require a special clause to be inserted into the policy covering them from any loss. This is called?
Mortgagee clause
You are doing a refinance loan for your borrowers non-owner occupied property. You look at the property profile and see that the site address and your customers' address are different. What action should you take?
No action required
Jumbo Loans are considered what type of loan:
Non-Conforming
PR is the generally accepted acronym for:
Preliminary Title Report
Which of these property types can be owner occupied?
Primary residence
The mortgage loan you submitted to the Lender has been approved. However, there are some conditions that the Lender requires before the loan docs will be sent to the closing office. These conditions are referred to as:
Prior to doc
PMI is the acronym for:
Private Mortgage Insurance
What fee is not included in the Loan Estimate?
Real estate broker fee
Which of the following would a lender NOT consider to be paid in advance? Real estate commission Mortgage insurance Prepaid interest Hazard insurance
Real estate commission
Front end ratios do NOT include which of the following?
Rent Payment
Business income is derived from a sole proprietorship and is calculated on which of the following tax forms? Schedule C Schedule E Form 1099 W-2
Schedule C
If the borrower is self-employed, what does the lender look for on the tax returns for income?
Schedule C and non-cash expenditures including depreciation
S.A.F.E. Act is the acronym for:
Secure and Fair Enforcement Mortgage Licensing Act.
Which of the following would qualify as the best comparables for a residential dwelling? A comparable from a home that has been sold, but has not been closed Sold homes that are similar to the subject property Three comparables from homes that have been listed on exactly the same street A comparable that indicated the highest value of the home, as provided by the real estate agent
Sold homes that are similar to the subject property
Included with the application is a "Continuation Sheet." What is the purpose of this form?
Space for information or explanations for which there isn't sufficient room on the application
The borrower applies for a loan and asks about tax impacts. Which of the following should be told to the borrower by the MLO?
Speak with a tax advisor for tax deductibility
What are two of the most important documents that the borrower signs at settlement?
The Loan Note and the Deed of Trust
Which of the following is NOT required for bonuses and overtime to be counted as income? The borrower must establish a positive trend for bonus and overtime income. The employer must verify that the borrower has received the bonuses and overtime for the past two years and that it is expected to continue. If the bonuses and overtime is more than 25% of the total income, the borrower must prove the income with two years of signed tax returns. The borrower must show that the total of bonuses and overtime has been decreasing for the past two years, and that this trend will continue.
The borrower must show that the total of bonuses and overtime has been decreasing for the past two years, and that this trend will continue.
Borrowers come to you for a mortgage loan. Which of the following would be appropriate to tell them about a fixed-rate mortgage? Some have up-front fixed fees, but not all. The rate is fixed for a time, and then may adjust. The up-front fees are fixed. The interest rate never changes.
The interest rate never changes.
When a Preliminary Title Report shows a judgment, which of the following is true Borrowers will not get a loan. Judgments have no bearing on mortgages. An indemnification agreement may be required. The judgment must always be paid off.
The judgment must always be paid off.
Which loan has the priority lien? The loan with the lowest rate The loan that is called the first mortgage The loan that has the largest balance The loan that was recorded first
The loan that was recorded first
A mortgage company is giving a borrower an FHA 1-year ARM. Which of the following is true?
The margin never changes.
There is no maximum for changes to the index. The margin never changes. The loan is funded by HUD. The index can only change a max of 1% per year.
The margin never changes.
A borrower has an Interest Only mortgage loan and wishes to make the minimum monthly payments required. If the homeowner decides to payoff the loan at the end of the loan term, what will the homeowner be required to pay?
The original loan amount
Which of the following would NOT cause a delay in funding the loan if closing has already taken place?
The seller wanted her maiden name included on the deed.
The borrowers wanted to expedite the home-buying process so they got a pre-approval. Which statement best describes their situation? They may or may not get the loan from the lender who gave the pre-approval. they will get the loan, but the interest rate may be different than originally quoted. They will definitely get the loan if they paid a non-refundable deposit to the lender. They will not get the loan, but now know what they qualify for.
They may or may not get the loan from the lender who gave the pre-approval.
Which of the following would NOT be considered a prepaid item? Prorated share of property taxes Partial month's interest on a new loan Title insurance Hazard or flood insurance premium for one year
Title insurance
URAR is the acronym for:
Uniform Residential Appraisal Report
Conforming loans most often use a loan application 1003 known as the:
Uniform Residential Loan Application.
URLA is the acronym for:
Uniform Residential Loan Application.
Which of the following would NOT be counted as income? Income from a Trust Payments from a note or mortgage that will continue for at least the next 36 months VA fully authorized education benefits Part-time income, if verified that it has not been interrupted for the past two years and is likely to continue
VA fully authorized education benefits
The written (VOE), is also known as :
Verification of Employment
Which of the following would NEVER require mortgage insurance? Federal Housing Administration Loans Loans with secondary financing Veterans' Affairs loans Conventional Loans
Veterans' Affairs loans
At what LTV is the lender required to automatically remove private mortgage insurance?
When the LTV is 78% of the original purchase price or appraised value
Which of the following situations always require full tax returns as documentation of income? When proof of hourly wages are needed When verifying self-employment income Full tax returns are never required just the Adjusted Gross Income on the first page When receiving W-2 only income
When verifying self-employment income
You want to open a mortgage brokerage and have talked to several lenders. Before you started doing business with them, what would you need to have?
Wholesale broker agreements
Which of the following is true concerning the YSP?
YSP is credit to the borrower.
According to the SAFE Act the only traditional loan in America today is:
a 30 year fixed rate.
FNMA is best described as:
a government sponsored enterprise that buys closed loans.
FHLMC (Freddie Mac) is best characterized as:
a government sponsored enterprise, owned and controlled by the U.S. government.
Private Mortgage Insurance is required on conforming 1st mortgage loans when the Loan-To-Value is:
above 80%.
The purpose of the Closing Disclosure is to
account for all money involved in the transaction.
When doing an appraisal, the appraiser, unless specifically instructed otherwise, will consider the financial part of the transaction to be:
cash or cash equivalent.
Each of the following would be considered a "recurring cost" EXCEPT: Property taxes hazard insurance. discount points. mortgage insurance. property taxes.
discount points.
If a property were located in a flood zone, the borrower would be required by the lender to obtain:
flood insurance.
Endorsements do not include:
liens.
When a lender in the primary mortgage market sells loans to the secondary market in groups of loans that are similar in quality and size, it is referred to as a:
loan pool.
The best appraisal method to be used for a single family residence would be:
market, sales or comparison approach.
On the application, property tax is entered in the amount that will be paid:
monthly.
On the loan application, the term of the loan should be entered in number of:
months.
A person, who functions as an intermediary between a lender and a borrower, is known as a:
mortgage broker.
Base employment income must be verified by:
most recent and current year-to-date pay stubs and the past two year's W-2 Forms
FHA allows loans on all property types except:
non-owner occupied.
If a borrower wants to do a Rate/Term refinance loan and is still in the process of paying off a Chapter 13 bankruptcy, in order to do this loan you will need to:
obtain signed approval from the customer's bankruptcy court judge.
The primary purpose of the loan application is to determine the borrower's:
stability, ability, and willingness to repay the loan.
The borrower is applying as self-employed. An underwriter would deal with the Schedule A and 2106 expenses by:
subtracting expenses from the income.
On a conforming purchase loan transaction, the maximum percent a seller can contribute under "Seller Contributions" is determined by:
the LTV on the purchase loan.
To accurately predict when a refinanced owner occupied property mortgage loan will fund after settlement, you must consider:
the Three-Day Right of Rescission.
The 1003 is also known as:
the URLA
If the ratios needed to qualify the buyer were expressed as 28/36, it would mean:
the debt to income ratio or housing ratio is 28% and the total debt to income ratio is 36%.
Your customer owns several rental properties, one-third of which have a Negative Net Lease. Therefore, you can conclude that:
the rents are equal to or less than the mortgage amount due each month.
If the borrowers wanted to be sure that the interest rate available at the time of their application would be the same when they closed on their home purchase, they would want:
to "lock" their interest rate.
If dividends and interest received are being used as income, the borrower must show documentation that they have been received for at least the past:
two years.
Self-employed borrowers must provide Federal Tax Returns, including all applicable schedules for the previous
two years.
To satisfy a lender's requirement to verify a prospective borrower's income, a lender will typically want to see employment history for the past:
two years.
Rental income can be verified by any of the following methods EXCEPT: copies of all rental agreements. written statement in the form of a notarized affidavit from the borrower certifying that the rent was actually received. IRS Schedule E. two years of tax returns.
written statement in the form of a notarized affidavit from the borrower certifying that the rent was actually received.
