Mortgage Loan Origination Process 3

Question 1

Which of the following is NOT one of the six items that trigger a completed mortgage application under TRID?

Accepted Answer

Borrower's employment history for the past two years

Answer

The six TRID application triggers are: name, income, SSN, property address, estimated value, and loan amount — employment history is not one of them.

Question 2

What is the role of an Automated Underwriting System (AUS) such as Fannie Mae's Desktop Underwriter during origination?

Accepted Answer

To provide a risk assessment and preliminary eligibility recommendation

Answer

AUS tools like Desktop Underwriter analyze application data and issue an Approve/Eligible or Refer recommendation to guide underwriters.

Question 3

A borrower has a front-end DTI of 31% and a back-end DTI of 45%. Which ratio is most likely to concern a conventional loan underwriter?

Accepted Answer

Back-end DTI of 45%

Answer

Conventional guidelines typically cap back-end DTI at 43–45%; a 45% back-end ratio is at the edge of acceptable limits.

Question 4

During origination, what does the term 'conditions' refer to in an underwriter's approval?

Accepted Answer

Specific outstanding items the borrower must satisfy before closing

Answer

Conditional approval means the loan is approved subject to specific conditions (e.g., proof of insurance, updated pay stubs) the borrower must clear.

Question 5

Which party is responsible for ordering the appraisal in a typical residential mortgage origination under current AMC rules?

Accepted Answer

The lender orders through an Appraisal Management Company (AMC) or an independent process

Answer

Post-2010 rules under the Dodd-Frank Act require lenders to use an independent process — typically an AMC — to maintain appraiser independence.

Mortgage Practice Test