Mortgage Loan Originator Loan Underwriting and Processing 3

Question 1

A 'clear to close' (CTC) means:

Accepted Answer

Underwriting has approved the loan and all conditions have been satisfied

Answer

The loan has been submitted to underwriting

Answer

The appraisal has been received

Answer

The borrower's credit has been pulled

Question 2

In mortgage processing, what is the purpose of a 4506-C form?

Accepted Answer

To authorize the IRS to provide tax transcripts to the lender

Answer

To order a credit report

Answer

To request employment verification

Answer

To order the appraisal

Question 3

Which type of appraisal approach is most commonly used for single-family residential properties?

Accepted Answer

Sales comparison approach

Answer

Cost approach

Answer

Income approach

Answer

Gross rent multiplier approach

Question 4

What does 'subject to appraisal' mean in a purchase transaction?

Accepted Answer

The loan is contingent on the property appraising at or above the purchase price

Answer

The appraisal was completed before the offer

Answer

The seller must pay for the appraisal

Answer

The property requires repairs before closing

Question 5

In underwriting, 'compensating factors' are used to:

Accepted Answer

Justify approval despite one or more risk factors exceeding guidelines

Answer

Reduce the interest rate on the loan

Answer

Replace the need for an appraisal

Answer

Eliminate the requirement for mortgage insurance

Question 6

What is PMI and when can a borrower request its removal on a conventional loan?

Accepted Answer

Private mortgage insurance; removed when LTV reaches 80% based on original value

Answer

Primary mortgage insurance; removed when the loan closes

Answer

Property management insurance; removed after five years

Answer

Premium mortgage indicator; removed when DTI drops below 43%