Mortgage Loan Origination Process 2

Question 1

Which federal law requires lenders to provide a Loan Estimate within three business days of receiving a mortgage application?

Accepted Answer

TRID (TILA-RESPA Integrated Disclosure) rule

Answer

The TRID rule, effective October 2015, requires lenders to deliver a Loan Estimate within three business days of application receipt.

Question 2

During loan origination, what does the term 'pre-qualification' primarily rely on?

Accepted Answer

Self-reported borrower information without formal verification

Answer

Pre-qualification is an informal assessment based on unverified, self-reported data from the borrower.

Question 3

A borrower's 'debt-to-income ratio' (DTI) during origination compares monthly debt payments to which figure?

Accepted Answer

Gross monthly income before taxes and deductions

Answer

DTI is calculated by dividing total monthly debt obligations by gross monthly income (before taxes).

Question 4

What is the primary purpose of the 'three-day waiting period' after a borrower receives the Closing Disclosure?

Accepted Answer

To give the borrower time to review final loan terms before closing

Answer

The mandatory three-business-day waiting period lets borrowers compare the Closing Disclosure to their Loan Estimate before signing.

Question 5

Which origination step involves verifying that the subject property's value supports the requested loan amount?

Accepted Answer

Appraisal

Answer

An independent appraisal is ordered to confirm the property's market value meets or exceeds the loan amount.

Mortgage Practice Test