Mortgage Loan Origination Process 5

Question 1

What is the meaning of 'clear to close' (CTC) in the mortgage origination process?

Accepted Answer

The underwriter has satisfied all conditions and the loan is approved for closing

Answer

The title company has cleared the property of all encumbrances

Answer

The borrower has cleared their credit report of all derogatory items

Answer

The Closing Disclosure has been delivered and the waiting period has begun

Question 2

Which document replaces the HUD-1 Settlement Statement and Good Faith Estimate for most residential mortgages originated after October 3, 2015?

Accepted Answer

Closing Disclosure and Loan Estimate under TRID

Answer

Mortgage Disclosure Improvement Act (MDIA) forms

Answer

Universal Residential Loan Application (Form 1003)

Answer

Affiliated Business Arrangement Disclosure

Question 3

During origination, a borrower's employment is verified via a Verification of Employment (VOE). What specific information does the VOE typically confirm?

Accepted Answer

Current employment status, start date, position, and income

Answer

The borrower's credit score and debt obligations

Answer

The borrower's rental history and landlord references

Answer

The property's compliance with zoning regulations

Question 4

What is the function of 'discount points' that a borrower may pay at origination?

Accepted Answer

They are prepaid interest that permanently lowers the loan's interest rate

Answer

They are fees paid to the government to register the mortgage lien

Answer

They cover the lender's underwriting and processing fees

Answer

They fund the escrow impound account for taxes and insurance

Question 5

A lender issues a 'revised Loan Estimate' to a borrower. Which of the following is a valid changed circumstance that allows this revision?

Accepted Answer

An Act of God causes the property to be damaged before closing

Answer

The lender decides to increase its profit margin on the loan

Answer

The borrower's credit score drops between application and underwriting

Answer

The borrower requests a different loan officer to handle the file

Question 6

What is the primary risk to a lender when originating a loan without verifying the borrower's stated income?

Accepted Answer

Increased risk of borrower default due to income misrepresentation

Answer

The loan cannot be sold on the secondary market

Answer

Violation of the Community Reinvestment Act

Answer

The appraisal becomes invalid without income verification

Question 7

In the origination process, which step directly follows the underwriter issuing a conditional approval?

Accepted Answer

The processor and borrower work to satisfy each outstanding condition

Answer

The lender orders a new appraisal to confirm the earlier valuation

Answer

The loan is immediately submitted to the secondary market for purchase

Answer

The closing agent schedules the closing date without further review