Mortgage Loan Origination Activities Questions and Answers

Question 1

A 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 monthly student loan payment. What is their back-end debt-to-income (DTI) ratio?

Accepted Answer

40%

Answer

The back-end DTI ratio is calculated by dividing the borrower's total recurring monthly debt by their gross monthly income. In this scenario, the total monthly debt is the sum of the proposed PITI ($1,800), the car payment ($400), and the student loan payment ($200), which equals $2,400. Dividing $2,400 by the gross monthly income of $6,000 results in 0.40, or 40%.

Question 2

On the Uniform Residential Loan Application (URLA), which section requires the borrower to disclose if they are a party to a lawsuit or have any outstanding judgments?

Accepted Answer

Section 5: Declarations

Answer

Section 5 of the URLA, titled 'Declarations,' specifically asks questions about the borrower's past financial history, including outstanding judgments, previous foreclosures, and whether they are currently a party to a lawsuit.

Question 3

Under the Fair Credit Reporting Act (FCRA), which of the following actions requires a "permissible purpose" to be legally performed by a mortgage loan originator?

Accepted Answer

Accessing a consumer's credit report.

Answer

The Fair Credit Reporting Act (FCRA) strictly governs who can access a consumer's credit report. An MLO must have a legally defined 'permissible purpose,' such as a consumer's application for credit, before they are allowed to pull the consumer's credit file.

Question 4

A mortgage loan originator is concerned that a property's appraisal value might come in too low. Which of the following actions is permissible under the Appraiser Independence Requirements (AIR)?

Accepted Answer

Asking the appraiser to consider additional, relevant comparable sales not included in the initial report.

Answer

Appraiser Independence Requirements (AIR) prohibit any actions that could coerce or unduly influence an appraiser's judgment. However, it is permissible to provide the appraiser with additional objective information, such as relevant comparable sales, or ask for corrections of factual errors. The other options represent prohibited attempts to influence the outcome.

Question 5

According to the TILA-RESPA Integrated Disclosure (TRID) rule, a lender must provide the Loan Estimate to a borrower within what timeframe after receiving a completed loan application?

Accepted Answer

No later than 3 business days

Answer

The TRID rule mandates that once a lender receives the six required pieces of information that constitute a completed application, they must deliver or place the Loan Estimate in the mail to the consumer no later than the third business day after receipt.

Mortgage Practice Test

Mortgage Practice Test

Mortgage Loan Origination Activities Questions and Answers