National Component Test PRACTICE EXAM #2 Flashcards Preview

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Flashcards in National Component Test PRACTICE EXAM #2 Deck (23)
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1

When filling out the loan application, a borrower that has ownership interest in the business that employs her should be marked as self-employed when that interest reaches what percentage?

25%

2

A borrower should expect to provide federal tax returns and W-2 forms for how many previous years?

2

3

When can the real estate taxes be disregarded for the purpose of determining debt ratios?

Real estate taxes can never be disregarded when determining debt ratios

4

A Chapter 7 bankruptcy could show on a credit report for a maximum of how many years?

10

5

What is the required cash investment the borrower must make to be approved for an FHA loan?

3.5%

6

What is the minimum number of comps required by most secondary lenders to ensure an accurate estimate of value when performing the sales comparison approach.

Three

7

When qualifying a borrower, an installment debt does not need to be included in the debt ratio when the balance of the term of repayment is less than how many months?

10

8

For a contract to be valid, it must contain all the following elements EXCEPT:

Legal object
Competent parties
Mutual consent
EXCEPT: Monetary consideration

9

When calculating the debt ratio, the calculation that best represents the front ratio is monthly:

Housing debt divided by gross monthly income

10

Which of the following statements is true about a full documentation loan?

Both income and assets are disclosed and verified

11

Which of the following forms is known as form 1003?

Uniform Residential Loan Application

12

For a sole proprietorship, income, expenses, and taxable profits are reported on:

Schedule C on IRS form 1040

13

The declarations section of the Uniform Residential loan Application asks about bankruptcy. An applicant must answer Yes/No about a declared bankruptcy, if it occurred during the past ________years.

7

14

In determining an applicant's qualifications, rental income can be documented from:

Schedule E and a federal ta return for the past tow years

15

After obtaining the initial application, a loan officer's next step is usually to:

Obtain a credit report

16

Which of the following information is NOT found on a loan application?

NOT FOUND: Finance charges for the loan

FOUND:
Applicant's income
Rate of interest for the loan
Prepaid items

17

A co-borrower's information is required to be recorded in a loan application form when the:

Income of the co-borrower is used for loan qualification

18

A borrower who has just completed a professional degree (PhD), but has no work history, would have to wait how long before adequate employment history is established?

As soon as any probationary period with the employer expires

19

The appraisal approach in which the replacement value is calculated is the:

Cost approach

20

What is NOT one of the factors underwriters consider in the decision whether to grant the mortgage loan?

NOT: Cause

Factors:
Capacity
Character
Credit

21

Section 502 loans are a program of which government entity?

USDA Rural Development

22

When the originating lender sells the rights to collect the payments, including interest, to another lender, the price charged in the sale is called:

A service release premium

23

After a loan is sold in the secondary market, the originating lender may be required to repurchase the loan due to:

A buyback agreement