MLO Activities (Sim Exam 5/9, 5/13 (#1), 5/17, 5/19, 5/21, 5/22, 5/28, 6/3, 6/10, 6/11, 6/22, 6/28, 7/4)

While reviewing a sales contract, you note the sale price as $125,000. The loan amount is $105,000 and buyer's closing costs total $4,720. The seller is completing $2,000 in repairs before closing. What is the acquisition cost of this transaction?

$125,000 + $4,720 = $129,720

If a property has a sale price of $190,000 and an appraised value of $187,000 with a loan amount of $142,100, what is the LTV?

$142,100 (proposed loan amount) divided by $187,000 (lesser of sale price or appraised value) equals 75.99% LTV.

Your borrower has a property that appraises for $200,000. Her existing first mortgage has a payoff amount of $95,000. What is the maximum loan amount available if she can borrow up to 85% CLTV on a second mortgage?

$200,000 X 85% - $95,000 = $75,000

You are refinancing a $200,000 mortgage with a prepayment penalty of six months of interest at 6.5%. How much is the prepayment penalty?

$200,000 x 6.5% (0.065) = $13,000; $13,000 / 2 = $6,500.

The acquisition cost of a property is $220,000 (sale price is $215,000 and the closing costs are $5,000) and the loan amount is $200,000. The seller is paying $2,000 of the closing costs. What is the total amount the borrower will need to bring to closing if the earnest money is $1,000 and is being credited on the Closing Disclosure at closing?

$220,000 - $200,000 - $2,000 - $1,000 = $17,000.

Your borrower qualifies for a 95% LTV and has a payoff of $70,000. How much cash is available if the appraisal is $95,000 and the closing costs are $3,000?

$95,000 X 95% = $90,250 - $70,000 - $3,000 = $17,250

If the final APR at settlement deviates by more than ______ from the initial APR on the preliminary Closing Disclosure on an irregular loan, an additional waiting period is triggered.

1/4%

A mortgage loan originator must make the settlement charges detailed in a Loan Estimate available for how many business days after disclosure?

10

What is the maximum LTV on a USDA Rural Development loan?

100%

How many months does a FICO Score consider a credit inquiry in the calculation?

12 months

A Qualified Mortgage (QM) places a limit of the fees a lender can charge a borrower for compensation on a residential mortgage loan. These fees generally cannot exceed____ of the total amount borrowed.

3.0%

Per Regulation B, lenders must notify applicants of an adverse action status with the required disclosures within how many days of receiving a complete application?

30

Which liability is EXEMPT from a debt ratio calculation?

401K loan re-payment

What is the maximum seller concession for an FHA-insured loan?

6%

There is a _____ waiting period once the Loan Estimate is provided to the borrower before closing a home loan.

7 business day

How long does a bankruptcy stay on the credit report under FICO scoring?

7-10 years

Fannie Mae and Freddie Mac guidelines generally consider those with credit scores above ____ as an acceptable credit risk and, therefore, there is little interest rate adjustment.

720

Which statement about the MIP on FHA-insured loans is TRUE?

A portion of it could be refunded if the loan is refinanced within three years.

Which is derived from average interest rates, points, and other loan pricing terms offered to consumers by a representative sample of creditors engaged in mortgage transactions that have low risk?

APOR

Bob wishes to refinance his mortgage and pay off his credit cards without using any personal funds. He owes $75,000 on his first mortgage, $10,000 on his second mortgage, and $3,000 in credit card debt. What would his appraisal value need to be if his closing costs are $4,000 and he qualifies for an 80% LTV?

Adding up everything Bob wishes to refinance equals $92,000. The $92,000 divided by the loan-to-value of 80% is $115,000.

Which statement is FALSE?

All forms of title defects must be removed in order to obtain title insurance.

If Bob pays $695.20 for principal and interest every month for 30 years on his $110,000 loan, how much interest will he pay over the life of the loan?

Bob will pay $140,272 in interest for that 30-year loan (695.20 x 12 months x 30 years = $250,272 total payment - $110,000 principal = $140,272 interest).

A loan applicant is relocating from the northeast to the mid-south for work, and her house is under contract. She plans on using the sales proceeds for her down payment and closing costs on her new house. How should those funds be listed on the 1003?

Equity from pending sale

Robby has a house that appraises for $125,000. Robby qualifies for an 85% LTV. He owes $63,000 on his first mortgage and $5,000 on his second mortgage. He would like to refinance his house into one mortgage loan and receive additional cash to pay off other debt. How much cash would be available if his closing costs are $4,200 and are financed in the loan?

First, determine the maximum loan amount Robby qualifies for: $125,000 x 85% = $106,250. Now, subtract the current debt and closing costs: $106,250 - $63,000 - $5,000 - $4,200 = $34,050 cash available.

Which of the following is true regarding adjustable rate mortgages when qualifying a borrower under the Ability to Repay rules?

Lenders must use the higher of either the fully indexed rate or introductory rate.

Which rule prohibits compensation based on loan terms or conditions such as interest rate, annual percentage rate, and loan-to-value?

Loan Originator Compensation Rule

A borrower owns several rental properties free and clear of any mortgage payment and does not claim the income from those properties on her tax returns. She doesn't want to list them on the 1003, as she doesn't have a payment. Is this permissible?

No, because of there are still liabilities from the properties

Which statement about the pre-approval of a borrower is TRUE?

Pre-approval can improve a buyer's negotiating position.

For VA-guaranteed loans, which statement is TRUE?

The funding fee can be financed.

What is the total monthly payment, including escrows, on a 30-year interest only loan of $205,000, taxes of $1,800 per half year, hazard insurance of $420 annually, $65 monthly mortgage insurance, and an interest rate of 6%?

The interest-only payment is calculated by multiplying the loan amount of $205,000 by the annual interest rate of 6% and dividing by the 12 monthly payments ($1,025 per month). Next, the taxes are quoted by the half-year so this amount is divided by 6 and not 12 ($300 per month). The hazard insurance is quoted annually so it must be divided by 12 ($35 per month). The mortgage insurance is quoted monthly ($65 per month). By adding these monthly amounts together, the total monthly payment is derived: $1,025 + $300 + $35 + $65 = $1,425 total monthly payment.

All are examples of the type of steering that is prohibited under the Loan Originator's Compensation Rule EXCEPT

The loan originator presents Carol, the borrower, with a loan product she easily qualifies for that offers the lowest risk to the borrower yet lower compensation to the lender

A borrower buys a house for $125,000 by getting a loan for $100,000. When the loan had a balance of $60,000, he decided to refinance to lower the interest rate by 2%. To do this, he has to pay a prepayment penalty of 1.5% on the remaining principal balance. How much will that prepayment penalty cost him?

The prepayment penalty is applied to the remaining principal balance of $60,000, which when multiplied by 1.5% equals $900

Homeowner Steve can drop his monthly mortgage payment from $1,580 to $1,352 if he refinances to a lower interest rate. How many months would it take him to recover the $2,710 closing costs?

The refi would save Steve $228 a month. It would take 12 months for him to recover the costs ($2,710 / $228 = 11.89 months).

Which statement about an FHA-insured loan is FALSE?

There are no debt-to-income ratio requirements.

Which government entity will make loans when no other lender is available in an area?

USDA

When qualifying a borrower for a loan, what type of loan requires that family size be considered in calculating maximum allowable monthly payment?

VA

For which situation would the sales comparison approach be best?

a condo in a complex with high turnover

Which of the following typical causes of delinquency is the most difficult to prove?

addiction

Which document would NOT be required at closing?

annual escrow statement

In a refinance transaction, who would generally be least likely to order the payoff from the current lender?

appraiser

A recorded deed is considered to be a(n)

constructive notice of title.

Mary, a single mother, applies for a first mortgage. What document is NOT necessary or applicable to comply with Ability to Repay rules?

copy of the appraisal of the home

Of these, what factor could be considered an acceptable basis for determining a borrower's ability to repay?

credit history

The main criteria for a borrower being approved for an FHA-insured loan is amount of income and

credit history

Which of these is not required for a complete application, triggering additional federally mandated disclosures according to Regulation Z?

debt

A document that conveys ownership of real property from the grantor to the grantee is known as a

deed.

When applying for an FHA-insured mortgage, what item must be brought to a satisfactory condition in order for the borrower to receive an approval?

defaulted federal student loan

Which fee is a lender prohibited from collecting?

fee for preparing a Loan Estimate

Gross living area includes a(n) (anything finished, heated, & above grade)...

finished attic, if it's heated.

A mortgage loan originator's obligation is over when the loan is

funded

The Home Ownership and Equity Protection Act...

gives borrower a 3-day cooling off period after receipt of the HOEPA Disclosure

The purpose of an appraisal is to

help the lender determine whether the collateral is sufficient security for the loan.

The Loan Estimate disclosure requirement does not apply to all real estate loans. All of the following loan types are exempt from the Loan Estimate disclosure requirement EXCEPT

home equity loans.

If you divide PITI by gross monthly income, you determine the

housing expense ratio.

An appraiser has been contracted to determine the value of a large apartment building for a potential investor. Which appraisal method is probably the most useful for this situation?

income approach

When using the sales comparison approach to arrive at an opinion of value, an appraiser looks

into the recent past to analyze similar sales.

At closing, who issues a clear to close?

lender

Items on the Loan Estimate that have unlimited tolerance for change include all of the following EXCEPT

lender-affiliated title insurance.

When a numerical error has occurred to the Closing Disclosure and the initial Closing Disclosure has been delivered to his borrower, MLO Fred must

make redisclosure.

When qualifying for a residential mortgage loan, an applicant's debts are likely to be measured as a

monthly payment amount.

The document that creates a lien against real property as security for promise to repay a loan is called a

mortgage

In order to complete an appraisal for a construction loan, what specific information does the appraiser need from the builder?

plans and specs of the project

According to Loan Originator Compensation Rules, if any individual loan originator receives compensation from a consumer in a residential mortgage transaction secured by a dwelling, it is prohibited for the loan originator to

receive the compensation directly or indirectly from any third party service provider in connection with the transaction.

All are examples of zoning requirements that may have to be included in construction loan costs EXCEPT

required use of specific contractor.

Which of the following types of income will not require additional information, such as likelihood that it will continue, to determine if the income can be used to qualify the borrower?

salary

Which of the following is not a liquid asset?

secured borrowed funds

To foreclose a mortgage in a lien theory state, the creditor must typically

serve the borrower with a notice to foreclose and then file a foreclosure action with the court.

Consumer credit reporting agencies generally keep Chapter 13 bankruptcies on a person's credit report for ____ years after the discharge date.

seven

Mary Ann wants to avoid foreclosure, so she asks the lender to accept a purchase price that is less than the amount owed on her property. This type of arrangement is a

short sale.

Borrower Teresa has a right to a copy of the appraisal report included in her mortgage loan file no later than ____business days before consummation.

three

How many years of employment are required to be disclosed on the mortgage loan application?

two

Who makes the final loan approval or denial decision for a conventional mortgage loan?

underwriter

The process of evaluating a loan application to determine the risk involved for the lender and to establish whether the risk is worth taking is known as

underwriting.