Mortgage Loan Origination Activities 3

Question 1

When a lender issues a loan commitment, what does this document signify?

Accepted Answer

The lender has agreed to fund the loan subject to specified conditions

Answer

The borrower has accepted the loan terms and signed the note

Answer

The property appraisal has been approved by the underwriter

Answer

The title company has cleared all liens on the property

Question 2

The Equal Credit Opportunity Act (ECOA) requires a lender to notify an applicant of a credit decision within how many days of receiving a completed application?

Accepted Answer

30 days

Answer

15 days

Answer

45 days

Answer

60 days

Question 3

A lender's underwriter requests additional documentation 10 days after receiving a loan file. What is this request called?

Accepted Answer

A stipulation or condition of approval

Answer

A deficiency notice

Answer

A prior-to-close condition

Answer

A re-verification of employment

Question 4

Which federal law prohibits lenders from denying mortgage loans based on the racial or ethnic composition of a neighborhood?

Accepted Answer

Fair Housing Act (FHA)

Answer

Truth in Lending Act (TILA)

Answer

Community Reinvestment Act (CRA)

Answer

Home Mortgage Disclosure Act (HMDA)

Question 5

During origination, a lender 'locks' a borrower's interest rate. If rates drop significantly before closing, the borrower typically:

Accepted Answer

May pay a float-down fee to access the lower rate if the lock includes a float-down option

Answer

Automatically receives the lower rate

Answer

Can cancel the lock penalty-free within 3 business days

Answer

Must close at the locked rate regardless of market movement

Question 6

For a purchase transaction, what is the MLO required to verify to confirm a borrower's source of funds for the down payment?

Accepted Answer

Bank statements showing sufficient funds and seasoning, plus explanation of large deposits

Answer

Only a verbal confirmation from the borrower is required

Answer

A signed gift letter if any portion comes from family

Answer

Only the most recent 30 days of bank statements

Question 7

Which origination activity is specifically prohibited under the SAFE Act for an individual acting as an MLO without a valid license or registration?

Accepted Answer

Taking a residential mortgage loan application or negotiating loan terms for compensation

Answer

Referring a borrower to a licensed mortgage company

Answer

Providing general information about mortgage products online

Answer

Pre-qualifying a borrower based on income estimates