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Question | Answer |
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what is the formula for computing gross income 1)paid twice per month 2)paid biweekly 3)paid weekly 4)paid hourly | gross x 24/12 gross x 26/12 gross x 52/12 hourly pay x 40 hours = week pay |
WHAT IS THE RANGE FOR "GROSS UP" FACTORS | 15% TO 25% in other word non-taxable income can be multiplied by 115% |
HOW IS THE PREPAYMENT PENALTY CALCULATED | outstanding principal X penalty rate |
HOW DO YOU CALCULATE LTV CLTV HCLTV | LOAN AMOUNT / PROPERTY VALUE LOAN AMOUNT1 + LOAN AMOUNT 2/VALUE LOAN AMOUNT 1+HELOC LIMIT/ VALUE |
WHAT IS HOUSING RATIO | "top ratio" aka "front end ratio" sum of PITI / brwr gross monthly income |
HOW IS PIER-DIEM INTEREST CALCULATED | principal x interest rate/ 360 days X # of days remaining in the month (includes closing day) |
HOW DO YOU CALCULATE SINGLE PREMIUM PLANS? AND MONTHLY PLANS FOR PMI | single: loan Amt x mortgage insurance factor monthly: loan amount x mortgage insurance factor /12 |
how do you calculate -MONTHLY PROPERTY TAX ESCROW PAYMENT -MONTHLY HAZARD INSURANCE | annual property tax/12 months annual hazard insurance /12 months |
WHAT IS TOTAL DEBT TO INCOME RATIO? how is it CALCULATED? | "back end ratio" aka "bottom ratio" Monthly PITI plus (+) other debts divided ( / )by borrower's gross monthly income (all recurring monthly debt/gross monthly income) |
WHAT IS THE INCOME APPROACH FOR AN APPRAISAL | during the income from the property by a "cap rate" percentage to be appropriate for the subject property |
WHAT IS THE DOWN PAYMENT ? HOW IS IT CALCULATED | unfinanced portion of the purchase price purchase price = 60000 LTV =75% (450000) 60000 x 75% = loan amount 60000 - 450000= 150000 down payment |
WHAT DOESN'T THE DTI RATIO INCLUDE (6) | utility payments food bills education expense (other than student loans) childcare expenses (other than child support) medical insurance premiums entertainment expenses |
WHAT IS A PERMANENT BUYDOWN | achieving a lower interest rate by paying discount points |
WHAT ARE SOME SOURCES OF FUND THAT CAN BE VERIFIED IN FILE WHEN BRWR HAVE ASSESTS TO STATISFY DOWNPYMNT TO CLOSE | cash in bank (at least two months) sale of current residence (must hv cd) gift funds (gft ltr) sale of other assets (prove owner ship) secured brwr funds (401k) |
WHEN WOULDN'T YOU USE PURCHASE PRICE TO CALCULATE LTV/CLTV/HCLTV | purchase price does not factor into any REFINANCE transaction where brwr has owned property for greater than 12 months use appraised value |
WHO IS RESPONSIBLE FOR THE ACCURACY OF ALL APPRAISAL REPORTS | THE LENDER |
WHAT HAPPENS IF YOU VIOLATE ABILITY TO REPAY (ATR) PROVISIONS | you have provided the consumer with a life to loan defense to foreclosure |
WHAT STEPS SHOULD UNDERWRITER TAKE IF AUS SAYS "APPROVED" "REFER" | A- UW verifies info on 1003(URLA) submitted to AUS matches R- UW must make manual credit decision on whether applicants risk factor meets FNMA + Freddie UW criteria |
WHAT IS THE SALES COMPARISON APPROACH FOR AN APPRAISAL | looking at least 3 recent properties sold w/ similar size + design within 1 mile of the subject property aka market data approach |
WHAT IS TITLE INSURANCE | is a type of insurance coverage that protects against defects in title that weren't listed on a title report |
WHAT DISCLOSURES MUST BE GIVEN BY MLO (5) | AFBA-affilated bis arrangement -1% ownership (repsa) LE (tila) mortgage loan servicing disclosure (repsa) CFPB home loan toolkit (TILA) list of settlement service providers that brwr can shop for -title etc (TILA) (CALMS) |
WHAT DISCLOSURES MUST BE GIVEN BY MLO FOR ARMS LOANS (3) | CHARM booklet (tila) arm disclosure (tila) homeownership counseling disclosure (tila) |
HOW DO YOU VERIFY INCOME W/ SELF-EMPLOYED BRWR WHATS REQUIRED | MLO should obtain tax returns for past 2 years all pages of all schedules of tax return if brwr has ownership interest in a partnership or corporation the business tax returns |
WHAT IS AN ENCROACHMENT | a structure or portion of a structure that extends over the boundary line of a property onto another parcel |
WHAT ARE ORGINIATION FEES | a fee or charge for work involved in the evaluation, preparation and submission of a proposed mortgage loan ex: underwriting, processing, preparing |
WHAT ARE THE 3 NATIONAL CREDIT BUREAUS AKA | Equifax transunion Experian aka consumer reporting agencies |
AFTER CLOSING HOW MANY DAYS DOES A BORROWER HAVE TO OCCUPY PROPERTY | 60 DAYS |
WHAT IS EQUITY STRIPPING | A practice where the applicants equity is taken away by a mortgage lender |
WHAT IS A TANGIBLE NET BENEFIT | brwrs must be receiving some sort of positive outcome for refinancing must be facts about new loan that makes refinance in brwr interest |
LONDON INTERBANK OFFERED RATE | the rate at which banks can borrow money from other banks in the London market |
WHAT DOES A MORTGAGE LOAN ORIGINATOR DO | job is to obtain a complete and accurate 1003 supported by documentation from brwr understand brwr goal in financing trans to give best options |
IF APR changes by ______ % what must happen | 1.4% for a regular loan 1.8% for irregular loan (construction loan etc) then new closing disclosure issued and add 3 bus-day wait |
IF BRWR HAS A PRE-FORECLOSURE EVENT HOW LONG IS THE SEASONING PERIOD | 4 YRS OR 2 YRS considered extenuating circumstances |
WHAT DOES TITLE INSURANCE DO FOR THE LENDERS POLICY | it protects the lender from claims that may jeopardize the validity or priority of lien |
WHAT IS THE HOME LOAN TOOL KIT | CFPB's informational booklet on general info for loan process from application to closing - w/ concentration on fees and charges |
IF YOU TRY TO INFLUENCE AN APPRAISERS OPINION OF VALUE ON A GIVEN PROPERTY WHAT ARE YOU IN VIOLATION OF | TILA +AIR |
WHY IS A TITLE SEARCH PERFORMED | to determine any encumbrances or liens affecting title by researching all known recorded document related to current + prior ownership of the property |
WHAT IS DEROGATORY CREDIT | mean applicant have not paid their obligations on time and have been reported late by creditors -must provide written explanation for each derogatory item |
IF BRWR HAS A COMPLETED FORECLOSURE HOW LONG IS SEASONING PERIOD W/ FREDDIE AND FNMA | 7 YRS but 3 years if foreclosure is a result of extenuating circumstances 4 yrs for preforeclosures |
WHAT IS RECONCILIATION STAGE OF APPRAISAL | the process by which an appraiser examines all 3 approaches and bases the property's final estimate of value on intended use of the property |
WHAT IS EQUITY | the value of the property minus the amount of the outstanding liens |
WHAT ARE PREPAYMENT PENALTIES | fees brwr must pay if loan principal is repaid in full before loan expiration |
WHAT IS YOUR CREDIT SCORE BASED ON | based on a statistical analysis of risk due to use of credit, # of open credit acts, # of credit inquires and derogatory credit |
WHAT ARE SOME REASONS TO REFINANCE | shorten loan term 30 years to 15 years take cash help kids in college lower rate + mortgage payment |
WHAT ARE DISCOUNT POINTS | are amounts charged by a lender to the brwr or seller in order to increase the lenders effective yield on the loan 1 discount point =1% |
BENEFITS /DOWN SIDE OF FINANCING CLOSING COST | b- reduces Amt of cash at closing ds- incurs higher total costs b/c those bear interest over life of loan |
WHEN IS UNEMPLYMENT INCME ABLE TO BE USED AS QUALIFYING INCME WHATS REQUIRED | when applicants wrk is seasonal and unemployment is apart of nature annual work cycle MLO should obtain tax returns from last 2 years |
WHAT IS THE COST APPROACH FOR AN APPRAISAL | calculate the cost of construction minus any depreciation plus value of land |
WHAT IS A CONTINGENT LIABILITY | when brwr has co-signed for another persons installment debt but the actual pymnts are being made by primary obligator |
WHAT IS VOD AND VOE | verification of deposit verification of employment |
ONCE A PURCHASE AGREEMENT IS EXECUTED MLO +brwr meet to complete | URLA uniform residental loan application "1003" |
WHAT ARE THE STEPS TO FUND A MORTGAGE LOAN (5) | originating > processing > underwriting > closing > funding mortgage |
WHERE DOES THE CLOSING TAKE PLACE | either at the title insurance company of at another location w/ a representative of the title insurance company |
WHEN IS A FACT CONSIDERED "MATERIAL" | if knowledge of the fact would lead a lender to consider a different course of action on the app |
IN ORDER FOR A LOAN TO PASS QM TEST WHAT NEEDS TO HAPPEN | they must calculate based on the highest payment that will apply in 1st 5 years of the loan that payment must result in debt ratio that is no more than 43% |
DEALING W/ TILA WHAT DOCS ARE REQUIRED TO BE GIVEN BY LENDER TO BRWR IN 3 BUS-DAY (5) | LE HOME LOAN TOOLKIT HOMEWOWNERSHIP COUNSELING DISCLOSURE ARMS- CHARM BOOKLET ARM DISCLOSURE |
A PROPERTY IS REQUIRED TO BE INSURED FOR THE COST TO REBUILD IT FROM SCRATCH OR THE LOAN AMOUNT WHICH EVER IS LESS. WHATS THE EASIEST WAY TO DO THAT | obtain extended replacement cost coverage |
WHATS IS PITI | brwr housing expense payment principal, interest, taxes, insurance, (hard, mortgage, flood) homeowners assoc. fee if applicable primary residence only |
IN ORDER FOR INCOME TO COUNT IN BRWR FAVOR LENDERS USUALLY REQUIRE | 2 yrs of verifiable incme (esp for OT or bonus) for income w/ expiration date (child support alimony,disability) must be likely to continue for at least 3 years after loan closing |
WHAT IS URAR | Uniform Residential Appraisal Report form used to appraise single family homes form 1004 |
WHAT IS AN EASMENT | a formal right granted to another party allowing them to access a given property (utility bills) |
WHAT IS HVCC & WHAT IS THEIR GOAL | home valuation code of conduct assure independence in the valuation process by eliminating coercive & manipulative practices by lenders & brokers trying to influence appraisal reports Prohibits anyone in the sales function from picking appraisers |
DEALING W/ RESPA WHAT DOCS ARE REQUIRE TO BE GIVEN BY LENDER TO BRWR IN 3 BUS-DAYS (2) | mortgage servicing disclosure affiliated business arrangement disclosure (when applicable) |
WHAT IS COFI | cost of funds index- avg cost of funds for San Fran, Ca fed home loan bank. this is the interest the bank must pay on its deposits |
WHAT IS THE BENCHMARK FOR DISCOUNT POINTS | for each discount point brwr interest is reduced by 1/8% |
WHAT DOES A LOAN PROCESSOR DO | assist MLO by reviewing submitted docs & make sure they're ready for UW Responsible for obtaining verification on documnts brwr provides |
WHAT IS PER-DIEM INTEREST | the amount if daily interest payable under a loan |
WHAT IS A BUS-DAY definition FOR ALL RESPA DISCLOSURES, LE ,CLOSING DISCL. TILA DISCL | respa, le & closing- any day that the credior is open for business to carry out substantially all of its business tila - any day except Sundays and federal holidays |
WHAT ARE ESCROW PAYMENTS | funds used by the lender to pay the property tax bill & hazard insurance premiums aka reserves or impounds |
WHAT IS "AIR" & WHAT DID it replace | Fannie & Freddie Appraiser Independence Requirement replaced HVCC (home valuation code of conduct) |
WHAT DOES AN UNDERWRITER DO | should be able to make an initial credit decision then review documentation validating the application info to support decision |
WHAT IS THE SEASONING PERIOD FOR BANKRUPTICES | depending on type filed and if loan is going to be sold to Freddie or fnma it can be from 2-5 years or 2 years w/ extenuating circumstances |
WHAT IS A TITLE REPORT | is a document typically prepared by an attorney or title company setting forth the conditions of the title |
WHEN IS PMI required | when any conventional loan exceeds 80% LTV |
EXAMPLE OF TEMP BUY-DOWN 3-2-1 BUYDOWN | interest rate reduced by 3% yr1 " 2% yr 2 " 1% yr 3 initial interest rate would return yr 4 |
AFTER APPLICANT HAS REC THE LOAN ESTIMATE WHEN CAN THE LOAN BE CONSUMMATED | 7 BUS-DAY WAITING PERIOD |
WHAT IS FORCE PLACE INSURANCE | if required insurance is canceled or not obtained a lender can insure the property and force the brwr to pay for it lender must provide brwr a notice 1st |
WHAT ARE THE TWO BIGGEST FACTORS LENDERS LOOK FOR IN INCOME (AND EMPLOYMENT) | stability consistency |
WHEN IS THE BRWR 1ST PYMNT DUE | first monthly payment due on the first day of the second month after closing |
WHAT ARE COMPENSATING FACTORS | positive characteristics about a brwr that might help offset some negative info on brwr application (high credit score for brwr w/ high debt to income ratio) |
WHAT ARE LIABILITIES | they are considered bills brwr has to pay out of monthly income |
WHAT IS THE PURPOSE OF A PROPERTY APPRAISAL | to document that the property has sufficient value to support the mortgage debt |
HOW MUCH CAN A LENDER COLLECT FOR PROPERTY TAXES IN RESERVE | no more than 2 months cushion 1/6 of a yr |
WHAT ARE AMCs + WHAT DO THEY DO | Appraisal management companies provide appraisal reports serve as a middle man for lenders/ brokers and appraisers due to prohibit contact |
HOW DOES LENDER CHOOSE WHICH # TO USE FROM 3 CREDIT BUREAUS | if the lender sees 3 scored will choose middle score / lender see 2 scores the lower of the 2 must be used |
WHAT ARE THE TWO LARGEST AUS SYSTEM | DU- desktop underwriter LP- loan prospector used for conventional conforming loan + many government loans as well |
WHAT DOES TITLE INSURANCE DO FOR THE OWNERS POLICY | reports on the condition of the title (outstanding liens) protects owner from claims against his/her ownership interest |
IF LTV RATIO IS GREATER THAN 80% WHAT DOES LENDER TYPICALLY REQUIRE BRWR TO PAY ON HAZARD INSURANCE | 1/12 of the annual hazard insurance premium into escrow monthly as part of monthly PITI |
WHAT IS GROSSING UP | calculating how much tax the brwr would pay if this income were taxable and then adding that figure to the gross amount received . commonly done when non-taxable income is used to qualify brwr |
ATR rules apply to all "consumers -purpose mortgages" except (5) | home equity lines of credit reverse mortgages timeshare loans temporary financing loans for business purposes |
WHAT ARE THE DELIVERY METHODS IN WHICH A DISCLOSURE CAN BE GIVEN? AND WHEN IS IT DEEMED RECEIVED ? | mailed- 3rd bus-day placed in mail email - same as reg mail unless brwr email confirming rec fax- the day after successfully transmitted in person- when presented to brwr |