Mortgage Loan Origination Activities 5

Question 1

A lender is calculating a borrower's debt-to-income (DTI) ratio for loan origination. Which of the following debts is correctly included in the back-end DTI?

Accepted Answer

The proposed housing payment plus all monthly installment and revolving debt obligations

Answer

Utility bills and cell phone payments

Answer

Only the proposed mortgage payment (PITI)

Answer

Student loan debts that are currently in deferment are always excluded

Question 2

What is the purpose of the Closing Disclosure (CD) in the loan origination process?

Accepted Answer

To provide the borrower with final loan terms and closing costs at least 3 business days before consummation

Answer

To lock the borrower's interest rate prior to underwriting

Answer

To satisfy HMDA reporting requirements for the lender

Answer

To document that the borrower has completed homebuyer education

Question 3

Under anti-steering provisions of the Dodd-Frank Act, an MLO is prohibited from directing a borrower to a loan primarily because it:

Accepted Answer

Generates greater compensation for the MLO than other loans the borrower qualifies for

Answer

Has the lowest possible interest rate available to the borrower

Answer

Is offered by the MLO's employer rather than a competing lender

Answer

Requires mortgage insurance, which adds to monthly costs

Question 4

A borrower is self-employed. Which documents are typically required to verify self-employment income during origination?

Accepted Answer

Two years of personal and business tax returns, year-to-date P&L, and business bank statements

Answer

Most recent W-2 and one pay stub

Answer

A letter from an accountant confirming annual income

Answer

Three months of bank statements showing regular deposits

Question 5

What is the 'three-day rescission period' in residential mortgage lending?

Accepted Answer

The right of a borrower to cancel a refinance on their primary residence within 3 business days of closing

Answer

The window in which a lender can rescind a rate lock after market volatility

Answer

The period during which an underwriter can withdraw a conditional approval

Answer

The time allowed for a borrower to dispute items on their credit report before closing

Question 6

When originating a VA loan, what is the primary purpose of the Certificate of Eligibility (COE)?

Accepted Answer

To confirm the veteran's entitlement amount and eligibility to use the VA loan benefit

Answer

To certify the property meets VA Minimum Property Requirements

Answer

To document the veteran's credit score as approved by the VA

Answer

To authorize the lender to charge a VA funding fee

Question 7

An originator discovers that a borrower's employer cannot be reached to verify employment at the time of closing. What is the most appropriate next step?

Accepted Answer

Place the loan on hold and attempt alternative verification methods such as a CPA letter or IRS transcripts

Answer

Close the loan and note the discrepancy in the file

Answer

Substitute a prior employer verification in place of the current one

Answer

Accept the borrower's verbal confirmation and proceed