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Loan- Policy Flashcards

(81 cards)

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1
Q

A persons fixed, permanent, ad principal home for legal purposes and dictates the in-state or out-of-state classification of a borrower.

A

Domicile

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2
Q

Appendix that defines citizenship and non-citizenship and provides various residency and employment statuses along with the applicable documentation requirements and loan to value/ loan to cost adjustments for residential mortgage, construction, and home equity products.

A

Appendix O

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3
Q

Where to find guidance on how to handle tax identification number or information discrepancies

A

Loan Policy - Chapter V Section B

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4
Q

How old must an applicant be to apply for a loan?

A

18 years old

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5
Q

Should offficers recommend the use of a co-signer?

A

No

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6
Q

What relationship should a co-signer have with the bank?

A

They should be a customer

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7
Q

Pre Tax Debt Servicing Ratio is calculated by

A

Dividing the applicants total cash available for debts (TCA) by the total cash required to service debts (TCR)

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8
Q

Residual Income =

A

TCR - TCA

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9
Q

DSR Requirements

A 
Residual Income.     Minimum DSR
< $30,000.                2.50
$30k- $50k.             2.00
$50k- $90k.             1.70
> $90,000.                1.50
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10
Q

Where is the minimum standard of documentation information found?

A

Documentation Requirements Section of Loan Policy (Chapter V, Section D)

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11
Q

What should be the minimum credit score for someone with established credit?

A

620-659

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12
Q

Loan to value

A

Ratio of a loan to the value of an asset purchased.

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13
Q

Loan to Value Calculation

A

LTV = loan amount on property1/ property1 worth

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14
Q

Higher Loan to Value =

A

More Risk

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15
Q

List of acceptable alternative payments

A

Rent, utility, private car loan, etc.

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16
Q

What are tradelines?

A

Credit Accounts: credit cards, car loans, mortgages, etc.

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17
Q

What are derogatory factors on credit?

A

Bankruptcy, collection, and excessive late payments

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18
Q

How long should an applicant be employed prior to their application?

A

6-12 months

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19
Q

How long should the applicant have resided at their present residence before application?

A

1 year

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20
Q

An encouraged approach to documenting the risk analysis of a loan is to address the __________ .

A

CAMELS

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21
Q

CAMELS

A 
Capital
Asset
Management
Earnings
Liability
Summary
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22
Q

Two mitigating factors of DSR deficiencies:

A

Liquidity

Low Loan to Value

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23
Q

Up to what % should officers consider LTV/ LTC exceptions

A

5%

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24
Q

What are some mitigating factors?

A

Stability of Income, employment, and residence
banking relationship
DSR - at least 1.0 greater than what is required by policy
Net Worth - 2 times the loan amount
Rental or Mortgage Repayment History
Completion of a homebuyer education course or credit repair counseling
Low loan to value

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25
Tools to assess real estate values
ValueCheck, comparable sales, Net Operating Income(NOI) analysis
26
What assets should be discounted during valuation of assets and liabilities?
Artwork, collectibles, personal furnishings, etc.
27
Are retirement funds protected in bankruptcy?
Yes
28
An agreement state in the borrower or guarantor will not encumber any of his assets during the life of the loan
Negative pledge agreement
29
An agreement stating the borrower or guarantor will not transfer any of his assets during the life of the loan
Non-transfer agreement
30
An agreement stating the borrower or guarantor will maintain a specified level of liquidity during the life of the loan
Minimum liquidity requirement
31
What three loan types does Ability to Repay (ATR) exclude?
Temporary financing, HELOC’s, and investment properties
32
4 Types of Borrowers
Salaried Borrowers Non-Salaried Borrowers Commercial Borrowers Non-U.S. Citizen Borrowers
33
What does ‘loan servicing’ include?
Bank collecting interest, principal, and escrow payments.
34
What does Chapter 12 in loan policy cover?
Real Estate Lending
35
In regards to taxes, what must be obtained prior to closing a new loan?
Verification that taxes are current
36
What is considered adequate insurance coverage?
A policy covering 100% of the value of the improvements (total value less land value)
37
A financial instrument or asset held by a third party on behalf of two other parties that are in the process of completing a transaction.
Escrow
38
What appendix has would give more details on flood insurance?
Appendix L
39
What subject is Appendix A?
Maximum Loan to Value
40
What is Appendix B?
Unique Property Deductions
41
What is covered in Appendix C?
Water Policy
42
FIRREA requires a current appraisal which is no more than how many months old?
12 months
43
What loan amount threshold does not, under FIRREA, require a current appraisal?
$250,000 or less
44
If the following credit conditions exist (the loan will be presented to the Loan Committee, the officer has elected to exceed loan to value guidelines outlined in Appendix A, sale of the subject collateral is the primary source of repayment with little or no secondary sources available, or the loan amount exceeds $150,000 except for loans secured by 1-4 family residential properties where an appraiser has completed an interior inspection) what must the officer do?
Visually inspect the property prior to approving a loan
45
Nonrecourse Loan A secured loan that is secured by a pledge of collateral, typically real property, but for which the borrower is not personally liable.
Nonrecourse Loan
46
For all non-recourse loan requests what must the officer do?
Conduct an exterior and interior inspection of the property and document with pictures
47
What is the standard interest rate lock?
60 Days
48
When the loan shall immediately become payable in full upon sale or transfer of the property
Due on sale clause
49
When collateral securing a loan is sold, the bank should require what?
Net proceeds from the sale to release the property
50
What is generally involved in loan servicing?
Collect interest Collect principal Collect escrow payments
51
Insurance that protects the bank. A form of insurance to provide security or protection against a loss in relation to property.
Title insurance
52
Tells who owns the property legally and allows the bank to go take the property if necessary.
Deed of Trust
53
What must be obtained prior to closing any new mortgage?
Real Estate Taxes
54
What is considered adequate insurance?
100% of the value of the improvements or property
55
What is an unsecured loan?
A loan with no collateral
56
What common finance calculation is DSR flipped?
Debt to Income
57
Who is responsible for establishing and maintaining loan policy?
Board of Directors
58
Committee responsible for giving feedback and guidance to the lending officer prior to issuance of a “Term Sheet” or “Letter of Interest” on loans greater than or equal to $5 million.
Conceptual Review Committee (CRC)
59
Generate loans and customer relationships consistent with FirstBank philosophy.
primary responsibility of loan officers
60
Credit card applications received at the market level and pre-selected applications generated through New Accounts should typically be forwarded to _____________.
CAL department for underwriting and processing
61
Why is there a fee when the customer denies escrowing for taxes and insurance?
Because we have to go into the account each year and make sure they paid.
62
What should you obtain EARLY in the mortgage application process?
Evidence of Insurance (EOI)
63
What unsecured consumer loan is submitted through Centralized Accounts and Loans (CAL) and is a good alternative for “personal loans?”
Cash Reserve
64
Where are Mitigating Factors Guidance located?
Loan Policy
65
Where are Credit Denial Reasons located?
ECOA and Reg B Manuals
66
Where are Loan Purpose Guidance located?
Loan Procedures Manual
67
Where are Consumer Lending Pricing Concessions located?
Loan Procedures Manual
68
Where are LMI Determination and Second Look Program located?
HMDA Manual
69
Where are Providing Appraisal Reports to Customers located?
Appraisal Policy
70
How many denial reasons can you cite?
4
71
If there are more than 4 denial reasons, which ones should I cite?
Most applicable
72
Where can you find more information and denial reasons?
Adverse Action Form on the Intranet
73
How many denial reasons are required to deny an application?
1
74
What acronym is helpful to see if a loan is HMDA covered?
R - Refinance I - Improve P - Purchase
75
Do we underwrite secondary market mortgages?
No
76
For a secondary market mortgage what must be ordered every time?
An appraisal
77
What time must a secondary market mortgage rate be locked?
2:30pm
78
If the closing date is unknown what date is generally placed?
12/31/2020
79
What is a PCR?
Property Condition Report
80
Where do you get a PCR from?
Value Check - must be ordered
81
Loan number on line of credits cannot be given out, therefore what must be placed as “loan number” when ordering PCR’s?
Branch # followed by property address

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