Module 5: Government Loan Programs

Question 1

Define Limited Denial of Participation

Answer 1

LDP

• Action taken by HUD to exclude person/company who fails to comply with HUD program standards.
• Effective nationwide
• Expires in 1 year
• MLO’s must check LDP list before processing FHA loan app.

Question 2

Define TOTAL

Answer 2

Technology Open to Approved Lenders (TOTAL)

- Scorecard to evaluate credit risk of FHA loans

Question 3

What are the property Guidelines for FHA loan approval

Answer 3

• Condition of property
• Occupancy
• Maximum mortgage amount permitted for location
• Eligibility of property

Question 4

What is the required minimum investment for a borrower seeking an FHA loan?

Answer 4

• 3.5% of the purchase price or appraised value (lesser of either) aka
• max of 96.5% LTV
• ## Credit score min 580

Question 5

Define Assumption

Answer 5

Assumption transfer of existing mortgage from existing to assuming borrower.

Question 6

Define Mortgage Insurance Premium

Answer 6

Based on the annual average outstanding loan balance divided into 12 payments.
- Cancelled when LTV reaches 78% and paid for 5 years.

Question 7

What loans are guaranteed by the federal government through the Veterans Benefits Administration, part of the VA.

Answer 7

VA-guaranteed loans