Mortgage Loan Origination Activities

Question 1

The mortgagee is the:

Answer 1

Lender.

Question 2

An insurance policy that protects the lender against potential loss caused by the borrower’s mortgage payment default is called:

Answer 2

Mortgage Insurance.

Question 3

An appraisal approach that is determined by prices paid for similar properties in the neighborhood is called:

Answer 3

Comparable Approach.

Question 4

Mortgage Loan Originator Rob Macioce has ordered a credit report for a young married couple who have applied jointly for a mortgage loan. The credit scores of the applicants are: Borrower – 725, 705, 753 Co-borrower – 625, 685, 667 Based on the above information, per FNMA conforming guidelines, what is the representative credit score for this couple?

Answer 4

667

Question 5

The FNMA form “1003” is the nickname of which of the following mortgage industry document?

Answer 5

Uniform Residential Loan Application

Question 6

What is included in the 1st ratio (front ratio) calculation?

Answer 6

Hazard insurance premiums

Question 7

Ms. Victoria receives child support payments of $2000 each month. Per FNMA guidelines, what amount of income should be allowed for monthly qualifying income?

Answer 7

$2,500

Question 8

Liquid assets are cash on hand or any tangible or intangible item that can be converted quickly and easily into cash, typically without losing much of their value. Liquid assets typical include all the following except:

Answer 8

Equity in a Real Estate investment

Question 9

Private mortgage insurance (PMI) is not required when:

Answer 9

The loan has been paid down to less than 78% of the property’s original purchase price.

Question 10

The borrower is purchasing a home for $534,500.00. He is requesting an 80% LTV. The interest rate is 5.875% fixed rate for 15 years. The closing date is June 23. How much pre-paid interest will the borrower have to pay at closing? (365-day calendar).

Answer 10

$550.60

Question 11

Flood insurance coverage is required for all residential buildings on the mortgaged premises if any part of the structure is located within a Special Flood Hazard Area (SFHA). Which of the following flood zones require flood insurance?

Answer 11

Zones A or V

Question 12

What is the written promise by the borrower to pay the debt owed to the lender under mutually agreed conditions?

Answer 12

Promissory Note

Question 13

The net and gross adjustment theory analyzes each of the dollar figure adjustments made in the entire appraisal and adjustments made of the comps as well. Guidelines vary, but many lenders prefer that net adjustments not exceed:

Answer 13

15%

Question 14

A mortgage company will approve an 80% financing on a sales price of $220,000. Taxes per year have been estimated to be $6450; the hazard insurance on the loan is 3/4% per year based on a replacement cost of $220,000, and the monthly P&I payment has been calculated to be $1,056. What monthly salary must the applicant make to qualify at 28%?

Answer 14

$6,182.14

Question 15

The borrower is paid $12.50 per hour and works a 37.5-hour week. Utilizing the FNMA/FHLMC housing expense ratio, what is the maximum PITIA this borrower qualifies for?

Answer 15

$568.75

Question 16

Freddie Mac defines the “Three C’s” of Underwriting as:

Answer 16

Credit Reputation, Capacity, and Collateral.

Question 17

LTV is best described as:

Answer 17

It is the ratio of the borrower’s principal loan balance to the appraised value of the property.

Question 18

FNMA uses the term “net tangible benefit” in its Selling Guide to say that borrowers must receive at least one or more basic advantages from refinancing. According to FNMA guidelines, the benefit categories include all the following except:

Answer 18

A lower interest rate offered by an Adjustable-Rate Mortgage.

Question 19

The value indicated by recent sales of comparable properties in the marketplace is called the sales comparison/market data approach. This approach is most often used for:

Answer 19

Existing Properties

Question 20

What is the name of the legal instrument in which real property is pledged by the mortgagor to the mortgagee as security for the repayment?

Answer 20

The Mortgage

Question 21

A borrower’s gross monthly income that can reasonably be expected to continue for at least the next three years is called:

Answer 21

Stable income

Question 22

Where on a credit report would you find information on collections, repossessions, foreclosures and bankruptcies?

Answer 22

Public Records section

Question 23

Thom Hulme believes the property he is purchasing was incorrectly identified as being in a Special Flood Hazard Area (SFHA) by the mortgage lender. To wave the flood insurance requirement, the Loan Officer should order an elevation certificate from whom?

Answer 23

Certified Architect

Question 24

Which of the following liabilities is not included in the borrower’s Total Debt to Income Ratio calculation?

Answer 24

Union dues

Question 25

When evaluating monthly debt, which is NOT considered?

Answer 25

credit union loan with seven payments remaining.

Question 26

Any claim, lien, charge, or liability attached to and binding on real property that may lessen its value or burden, obstruct, or impair the use of a property but not necessarily prevent the transfer of title is called:

Answer 26

Encumbrance

Question 27

Eric Paulson is purchasing a nonowner-occupied residential investment property. He has no experience as a landlord; however, he has provided a signed one-year lease agreement for $1500 per month. Eric wishes to use the rental income as qualifying income. What amount may be used to qualify Eric?

Answer 27

1,125

Question 28

Which of the following types of income would require the lender to verify there are three or more years likelihood of continuance?

Answer 28

Distributions from a retirement account

Question 29

What is the name of a mortgage loan that is secured by a pledge of real property but for which the borrower is not personally liable?

Answer 29

Non-Recourse Loan

Question 30

An applicant has requested an adjustable-rate mortgage with the lowest possible payment. After several failed attempts to explain how the adjustable-rate mortgage works, the Loan Officer realizes the applicant has no comprehension of how the loan program works. What course of action should the loan officer take?

Answer 30

Act in the best interest of the consumer and not offer the product to the borrower.

Question 31

A current and verified liability appears on an applicant's credit report; however, it was not shown on their loan application. What would be the most appropriate course of action for the loan officer to take?

Answer 31

Request a reasonable explanation and documentation to support the explanation for the undisclosed debt from the applicant.

Question 32

An applicant has requested a refinance of a home valued at $385,000. The refinance transaction includes a HELOC with a $75,000 limit with a current balance of $40,000. The first mortgage is $175,000. What is the correct LTV, CLTV, and HCLTV for this refinance transaction?

Answer 32

45% LTV / 56% CLTV / 65% HCLTV