Mortgage Loan Originator Prep 2

Question 1

Under RESPA, which fee is the lender required to provide on the Loan Estimate?

Accepted Answer

Appraisal fee estimated by the lender

Answer

RESPA requires lenders to provide a good-faith estimate of the appraisal fee on the Loan Estimate, while some fees like transfer taxes are set by third parties.

Question 2

What is the primary purpose of the Ability-to-Repay (ATR) rule under Dodd-Frank?

Accepted Answer

Ensure borrowers can reasonably repay the loan before it is made

Answer

The ATR rule requires lenders to make a reasonable, good-faith determination that borrowers have the ability to repay the loan before originating it.

Question 3

A borrower's gross monthly income is $6,000. Their proposed housing payment is $1,500 and total monthly debts are $600. What is their total DTI ratio?

Accepted Answer

35%

Answer

Total DTI = (housing payment + all debts) / gross income = ($1,500 + $600) / $6,000 = 35%.

Question 4

Which federal law requires lenders to give borrowers a three-business-day right of rescission on refinances of primary residences?

Accepted Answer

Truth in Lending Act (TILA)

Answer

TILA grants borrowers a three-business-day right to rescind a refinance transaction on their primary residence.

Question 5

What does LTV stand for, and how is it calculated?

Accepted Answer

Loan-to-Value; loan amount divided by appraised value

Answer

LTV (Loan-to-Value) is calculated by dividing the loan amount by the lesser of the appraised value or purchase price.

Mortgage Loan Originator Practice Test

Mortgage Loan Originator Practice Test

Mortgage Loan Originator Prep 2