Mortgage Loan Originator Assessment 2 — Questions and Answers
Question 1: A borrower's gross monthly income is $6,000 and total monthly debt payments are $2,100. What is their debt-to-income (DTI) ratio?
- 35% (Correct answer)
- 28%
- 43%
- 31%
Correct answer: 35%
DTI = total monthly debt / gross monthly income = $2,100 / $6,000 = 35%.
Question 2: Which federal law requires lenders to provide borrowers with a Loan Estimate within three business days of receiving a loan application?
- RESPA
- TILA-RESPA Integrated Disclosure (TRID) (Correct answer)
- HMDA
- ECOA
Correct answer: TILA-RESPA Integrated Disclosure (TRID)
TRID, which integrates TILA and RESPA disclosures, requires the Loan Estimate be delivered within three business days of application.
Question 3: A property appraises for $280,000 and the borrower wants to borrow $238,000. What is the loan-to-value (LTV) ratio?
- 82%
- 85% (Correct answer)
- 78%
- 90%
Correct answer: 85%
LTV = loan amount / appraised value = $238,000 / $280,000 = 85%.
Question 4: Under the SAFE Act, which entity maintains the Nationwide Multistate Licensing System (NMLS) registry?
- The Federal Reserve
- Conference of State Bank Supervisors (CSBS) (Correct answer)
- The CFPB
- HUD
Correct answer: Conference of State Bank Supervisors (CSBS)
The NMLS is operated by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators.
Question 5: Which type of mortgage index is based on U.S. Treasury securities and commonly used for adjustable-rate mortgages?
- LIBOR
- SOFR
- Constant Maturity Treasury (CMT) (Correct answer)
- Prime Rate
Correct answer: Constant Maturity Treasury (CMT)
The Constant Maturity Treasury (CMT) index is widely used as a benchmark for ARM loans and is based on U.S. Treasury yields.
Question 6: What is the maximum seller concession allowed on a conventional loan with an LTV greater than 90%?
- 6%
- 9%
- 3% (Correct answer)
- 2%
Correct answer: 3%
Fannie Mae limits seller concessions to 3% of the sales price when LTV exceeds 90% on conventional loans.
Question 7: A borrower receives a mortgage with a rate of 6.5% and the APR disclosed is 6.78%. What accounts for the difference?
- The APR includes taxes and insurance
- The APR includes fees and costs of credit spread over the loan term (Correct answer)
- The APR reflects the margin added to the index
- The APR is the rate after discount points are removed
Correct answer: The APR includes fees and costs of credit spread over the loan term
APR includes the interest rate plus financing costs such as origination fees and points, expressed as a yearly rate.
Mortgage Loan Originator Assessment 2
A borrower's gross monthly income is $6,000 and total monthly debt payments are $2,100.
What is their debt-to-income (DTI) ratio?