CMC Client Relations and Advisory 3 — Questions and Answers
Question 1: A first-time homebuyer is overwhelmed by the mortgage process. What is the most effective first step a CMC should take?
- Submit the application immediately to lock the rate
- Conduct a structured financial education session to set expectations (Correct answer)
- Recommend the lowest-rate product available
- Refer the client to an online mortgage calculator
Correct answer: Conduct a structured financial education session to set expectations
Educating first-time buyers about the process reduces anxiety, builds trust, and leads to more accurate information gathering throughout the transaction.
Question 2: A client reveals they recently had a bankruptcy discharged 18 months ago. Which loan type has the shortest seasoning requirement for this situation?
- Conventional (Fannie Mae)
- FHA
- VA (Correct answer)
- Jumbo
Correct answer: VA
VA loans require only a 2-year seasoning period after Chapter 7 bankruptcy discharge, which is among the shortest of any loan type.
Question 3: Which disclosure must a lender provide to a borrower within three business days of receiving a mortgage application?
- Closing Disclosure
- Loan Estimate (Correct answer)
- Truth-in-Lending Statement only
- Good Faith Estimate
Correct answer: Loan Estimate
TRID rules under RESPA and TILA require lenders to deliver the Loan Estimate within three business days of application receipt.
Question 4: A client is considering a cash-out refinance to consolidate high-interest credit card debt. The CMC's ethical responsibility includes:
- Processing the request without comment
- Disclosing that unsecured debt becomes secured by the home, increasing foreclosure risk (Correct answer)
- Recommending the maximum cash-out amount for the largest commission
- Avoiding discussion of risks to prevent client hesitation
Correct answer: Disclosing that unsecured debt becomes secured by the home, increasing foreclosure risk
Ethical advisory requires informing clients that converting unsecured debt to home-secured debt puts their property at risk if they cannot make payments.
Question 5: What does a CMC use a tri-merge credit report for during the advisory process?
- To verify the client's employment history
- To review scores from all three bureaus and identify the qualifying middle score (Correct answer)
- To determine the appraised value of the property
- To confirm the client's bank account balances
Correct answer: To review scores from all three bureaus and identify the qualifying middle score
A tri-merge report pulls Equifax, Experian, and TransUnion scores simultaneously, and lenders use the middle score of the three for qualification decisions.
Question 6: A client wants to avoid PMI on a conventional loan but only has 10% down. Which strategy should the CMC explore?
- Increase the loan amount to remove PMI
- Use a piggyback (80/10/10) loan structure (Correct answer)
- Switch to an FHA loan
- Request a lender credit to waive PMI permanently
Correct answer: Use a piggyback (80/10/10) loan structure
An 80/10/10 structure uses a first mortgage for 80%, a second mortgage for 10%, and 10% down, eliminating the need for PMI on the primary loan.
Question 7: During a refinance consultation, a client states their primary goal is the lowest possible monthly payment. The CMC should FIRST ask:
- What is your credit score?
- How long do you plan to stay in the home? (Correct answer)
- What is your current interest rate?
- Have you refinanced before?
Correct answer: How long do you plan to stay in the home?
Knowing the client's intended time horizon helps determine whether extending the loan term makes financial sense or merely defers interest costs without net benefit.
CMC Client Relations and Advisory 3
A first-time homebuyer is overwhelmed by the mortgage process.
What is the most effective first step a CMC should take?