CMP - Certified Mortgage Processor Loan Processing Fundamentals Questions and Answers

Question 1

According to the TILA-RESPA Integrated Disclosure (TRID) rule, when must the initial Loan Estimate be provided to a mortgage applicant?

Accepted Answer

Within 3 business days of the lender's receipt of the loan application.

Answer

The TRID rule mandates that lenders must deliver or place in the mail the initial Loan Estimate to the consumer no later than the third business day after receiving the consumer's completed loan application.

Question 2

A loan processor is calculating a borrower's back-end debt-to-income (DTI) ratio. The borrower has a gross monthly income of $6,000. Their proposed monthly mortgage payment (PITI) is $1,800. They also have a $400 monthly car payment and a $200 minimum monthly credit card payment. What is the borrower's back-end DTI?

Accepted Answer

40%

Answer

The back-end DTI is calculated by dividing the total monthly debt payments (including the new mortgage) by the gross monthly income. In this case: ($1,800 PITI + $400 car payment + $200 credit card payment) / $6,000 = $2,400 / $6,000 = 0.40, or 40%.

Question 3

Which of the following is the primary purpose of the IRS Form 4506-C in the mortgage loan process?

Accepted Answer

To authorize the lender to obtain transcripts of the borrower's tax returns from the IRS for income verification.

Answer

The IRS Form 4506-C is signed by the borrower to give the lender permission to request tax return transcripts directly from the IRS. This is a crucial step for verifying the income stated on the loan application.

Question 4

A mortgage broker refers a client to a title company and in return, the title company provides the broker with free marketing flyers and pays for their client appreciation event. This arrangement is a potential violation of which federal regulation?

Accepted Answer

Real Estate Settlement Procedures Act (RESPA)

Answer

Section 8 of RESPA prohibits giving or receiving any fee, kickback, or thing of value in exchange for the referral of settlement service business. The free marketing materials and event funding would be considered a 'thing of value' in exchange for the referral, which is a direct violation.

Question 5

Under the CFPB's rules, after the initial Closing Disclosure is delivered to the borrower, a new three-business-day waiting period is triggered if which of the following changes occurs?

Accepted Answer

The annual percentage rate (APR) becomes inaccurate.

Answer

A new three-day waiting period for the Closing Disclosure is required for three specific changes: 1) the APR becomes inaccurate (generally a change of more than 1/8th of a percent for a fixed-rate loan), 2) a prepayment penalty is added to the loan, or 3) the basic loan product changes (e.g., from a fixed-rate to an adjustable-rate mortgage).

CMP - Certified Mortgage Processor Practice Test

CMP - Certified Mortgage Processor Practice Test

CMP - Certified Mortgage Processor Loan Processing Fundamentals Questions and Answers