Segment 8: The Mortgage Loan Application
Which of the following is one of the three choices available for Refinance Type on the Lender Loan Information form? A) Limited Cash Out B) Home Improvement C) All Cash Out D) Other
A) Limited Cash Out If the transaction is to refinance an existing loan, the loan originator must indicate the refinance type (no cash out, limited cash out, or cash out) and the refinance program (full documentation, interest-rate reduction, streamlined without an appraisal or other).
If a loan is already in process on March 1, 2021, when the new URLA must be utilized, what will happen to that loan's application? A) The loan will continue to be processed using the prior URLA application B) The underwriter must get authorization from FNMA to process the loan C)The loan application must be resubmitted using the new URLA D) The applicant's entire residential loan transaction will become void
A) The loan will continue to be processed using the prior URLA application Loans in progress that were originated using the current uniform residential loan application will continue to be processed as such.
What is one of Fannie Mae's reasons for the redesign of the URLA? A) To make the application form easier for consumers to understand B) To ensure that all consumers qualify for conventional financing C) To showcase the benefit of using paper applications versus digital applications D) To report the number of loan applications taken by each NMLS-registered licensee
A) To make the application form easier for consumers to understand According to Fannie Mae (FNMA), the redesigned URLA utilizes a redesigned format to be more consumer-friendly and support accurate data collection and better efficiency, is professionally designed, consumer industry tested, available in a dynamic electronic form presented in a fillable format with sections that expand and contract based on information provided, and supports the collection of loan application details that are relevant and useful in making an underwriting decision.
Which one of the following would severely impact a borrower's credit score? A) Applying for a new credit card B) Being 60 days past due on a debt C) A soft-inquiry is made on the credit report D) Having a $0 balance on a revolving credit account
B) Being 60 days past due on a debt Being past due on a payment owed to a credit will have a major impact on an individual's credit score.
Which part of the URLA will include information about the borrower such as their income and existing assets? A) The Documentation Sheet B) The Borrower Information Form C) The Qualification Form D) The Applicant Data Page
B) The Borrower Information Form The Borrower Information Form of the Universal Residential Loan Application is the primary component to the mortgage application. This form is used to collect information pertaining to the borrower(s), their employment, their income, and their assets including any real estate that they may own.
While completing the redesigned URLA, why is it important for the loan originator and loan applicant to review the applicant's credit report together? A) To confirm which portions of the applicant's credit report should be documented on the URLA B) To clarify any apparent red flags and ensure the accuracy of the data provided by the credit report C) To verify that the property the applicant intends to purchase is adequate for their lifestyle D) To affirm whether the applicant needs to disclose additional sources of income such as alimony
B) To clarify any apparent red flags and ensure the accuracy of the data provided by the credit report It is critical that the loan originator and applicants carefully review the credit report together to clarify any apparent red flags and ensure the accuracy of the data provided by the credit report.
All residential loan applications taken after must utllize the new URLA. A) January 1, 2021 B) March 1, 2021 C) February 20, 2021 D) January 31, 2021
B) march 1, 2021 Industry professionals may voluntarily begin to use new URLA effective with applications taken on and after January 1, 2021 all new applications occurring on and after March 1, 2021, must be originated by using the redesigned URLA.
Lenders will review a mortgage loan applicant's credit score to help them determine: A) which consumer index to use when calculating the loan's interest rate. B) the risk that the borrower will default on his/her mortgage loan. C) the loan amount and prepayment penalty for the borrower's loan. D) if the borrower can afford to pay a higher loan commission.
B) the risk that the borrower will default on his/her mortgage loan. The borrower's score will meet within a range that determines his or her credit risk. The higher the score, the less risk that the borrower will default, as a higher score reflects that the borrower is historically responsible with his/her finances and credit
Which one of the following is NOT one of the three major credit bureaus? A) TransUnion B) Experian C) NMLS D) Equifax
C) NMLS There are three major credit bureaus: Equifax, Experian®, and TransUnion®.
Why is it important to include the applicant's full, legal name on the URLA as well as any alternative names the applicant refers to themselves as? A) To verify if the applicant has a federally-recognized legal first, middle, and last name B) To ensure all relevant credit and public information can be found about the applicant C) To protect the method in which the loan application intends to hold title to the property D) To confirm the past two years' residential history of the loan applicant
B) to ensure all relevant credit and public information can be found about the applicant To ensure the discovery of any matters of public record that may belong to the applicant, as well to maximize the likelihood of an accurate credit report, the loan originators should list any other name(s) or name deviations that the borrower is using or may have used under the alternative name selection, especially if they have secured credit under that name.
On the Estate Will Be Held At section of the Lender's Loan Information form, what needs to be included when the loan applicant will own the structure but not the land the structure sits on? A) The method by which the loan applicant may buy the land B) The landowner's contact information C) The expiration date of the leasehold estate D) How the borrower holds title to the land
C) The expiration date of the leasehold estate A "fee simple estate" means that the borrowers will own the land and the real property (dwelling) constructed upon it. If the borrowers are to or already own the real property but not the land, this would be considered a "leasehold estate." The Lender Loan Information section will require the expiration date (mm/dd/yyyy) of the leasehold.
Borrowers with higher credit scores will receive: A) discounts on loan originator compensation rates B) kick-backs on residential loan leads and referrals. C) better terms and interest rates on their loans D) a default forgiveness feature on their loans.
C) better terms and interest rates on their loans. Borrowers with higher credit scores will receive better terms and interest rates on their loans.
What percentage of a business must an applicant own, as the business owner, to be considered self employed for URLA purposes? A) 5% or less B) At least 10% C) Between 15% and 20% D) 25% or more
D) 25% or more Borrowers who own 25% or more of the business that employs them, regardless of the method in which they are paid, must be considered self-employed.
What is the highest FICO credit score that an individual can have? A) 620 B) 750 C) 803 D) 850
D) 850 An individual's FICO credit score will be calculated from the minimum 350 to a maximum of 850
What is the Unmarried Addendum form in the redesigned URLA used for? A) To ensure the loan applicant must apply for a refinance if they get married during the term of the loan B) Only if the loan applicant refuses to self-identify for government monitoring purposes C) Disclosing whether they are a cosigner or guarantor on any debt not disclosed on the application D) When there are two or more borrowers applying for joint credit who are not legally married to each other
D) When there are two or more borrowers applying for joint credit who are not legally married to each other The unmarried addendum is to be completed when there are two or more borrowers applying for joint credit who are not legally married to each other. By completing the unmarried addendum, the unmarried applicant is asked to disclose the existence of any other individual who is not a legal spouse but who does or may enjoy real property rights similar to those of afforded to a legal spouse and recognized by the state in which the applicant resides and or where the subject property is located.
