Mortgage Loan Origination Process 4

Question 1

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

Accepted Answer

Two years of personal and business tax returns plus a year-to-date P&L

Answer

Last two months of pay stubs and a W-2

Answer

A signed letter from the borrower's accountant only

Answer

Three months of bank statements showing regular deposits

Question 2

What is the purpose of a 'gift letter' during the mortgage origination process?

Accepted Answer

To confirm that down payment funds received as a gift do not require repayment

Answer

To document that the seller is gifting closing costs to the buyer

Answer

To authorize a gift of equity from a family member seller

Answer

To transfer the interest rate lock as a gift to a co-borrower

Question 3

Under ECOA, within how many days must a lender notify an applicant of adverse action on a mortgage application?

Accepted Answer

30 days

Answer

7 days

Answer

15 days

Answer

45 days

Question 4

Which origination scenario best illustrates 'steering' under RESPA and CFPB guidelines?

Accepted Answer

A loan officer directing a borrower to a higher-cost product to earn a larger commission

Answer

A loan officer recommending the lowest-rate product available to the borrower

Answer

An underwriter requesting additional documentation before approving a file

Answer

A processor ordering a flood zone determination for a riverfront property

Question 5

What is the significance of the 'application date' in the TRID origination timeline?

Accepted Answer

It triggers the three-business-day window to deliver the Loan Estimate

Answer

It starts the three-day clock for delivering the Closing Disclosure

Answer

It sets the rate lock start date automatically

Answer

It is the date the underwriter must render a credit decision

Question 6

A borrower's credit report shows a 30-day late payment from 18 months ago. How might an underwriter typically address this during origination?

Accepted Answer

Require a written explanation (Letter of Explanation) from the borrower

Answer

Automatically deny the application under federal guidelines

Answer

Ignore it since it is beyond the 12-month look-back period

Answer

Require the borrower to pay off all existing debt before proceeding

Question 7

In a purchase transaction, when does the lender typically order the title search during origination?

Accepted Answer

After the purchase contract is executed and the application is received

Answer

Before the borrower submits an application

Answer

Only after the underwriter issues final approval

Answer

At closing, immediately before funds are disbursed