Loan Application Flashcards
(24 cards)
Which document is used to apply for a loan
1003
What legislation was created as a result of the recession?
Dodd-Frank
What is section one of the 1003?
The “Type of Mortgage and Terms of Loan” Section
What is section two of the 1003?
Property Information and Purpose of the Loan
What is required after the borrower provides the street address of the property?
A legal description, which is obtained from the county recorder’s office or through a title insurance company.
What is a leasehold?
A lease hold is “an estate in realty held under a lease; an estate for a fixed term or years”. It does not secure permanent ownership.
What is “fee simple”
The owner is entitled to the entire property with unconditional powers of disposition forever.
What is in section three of the loan application?
Borrower information
What is on section four of the loan application
Employment information
what is section five of the URLA?
Monthly income and combined housing expense information
What is section six of the loan application?
Assets and liabilities
Which assets count as liquid assets?
Cash, “earnest money”, checking accounts, savings accounts, stocks, bonds, and cash value and face amount of life insurance policies
What are some examples of non-liquid assets
Real estate, retirement account, net worth of businesses, cars
What is the difference between liquid and non-liquid assets
Non-liquid assets cannot readily be converted into cash, whereas liquid assets are available immediately or near-immediately
What is on section VII of the loan application?
details of the transaction
What is in section VIII of the loan application?
declarations of other matters that might impact the borrower’s ability to repay the loan
How long must bankruptcies and foreclosures be disclosed on the loan application?
Seven years
What is section IX of the loan application?
Acknowledgement and agreement that the borrower understands the purpose of the loan and that the application will be secured by a deed of trust on the property
What is section X of the loan application?
Information for government monitoring purposes
What law requires section X to be filled out?
HMDA
What does the Loan Originator do if the applicant refuses to fill out section X?
The LO must collect the data based on visual observation or surname.
How long must a self-employed applicant show income for?
Two years, and they may request verification documents such as tax returns for the period, a year to date profit and loss statement, balance sheets for the past two years, or a self employed income analysis
Why is the age of the borrower asked for on the loan application?
To make sure the borrower is of age to enter into a contract.
Commission income must be verified if it represents how much of the applicants annual income?
25%
