Banking Mortgage Banking 3

Question 1

What is the purpose of a home appraisal in the mortgage origination process?

Accepted Answer

To provide the lender with an independent estimate of the property's market value

Answer

To determine the borrower's creditworthiness and repayment capacity

Answer

To inspect the home for structural defects and required repairs

Answer

To calculate the borrower's future property tax obligations

Question 2

Under the Equal Credit Opportunity Act (ECOA), lenders are prohibited from discriminating in credit decisions based on which factors?

Accepted Answer

Race, color, religion, national origin, sex, marital status, or age

Answer

Credit score and loan-to-value ratio

Answer

Property location and home type

Answer

Debt-to-income ratio and length of employment

Question 3

What does mortgage underwriting involve?

Accepted Answer

Evaluating a borrower's credit, income, assets, and the property to determine loan approval and terms

Answer

Marketing mortgage products and generating leads from potential borrowers

Answer

Legally recording the mortgage lien with the county recorder's office

Answer

Calculating monthly payment schedules and amortization tables for borrowers

Question 4

What does the Home Mortgage Disclosure Act (HMDA) require covered lenders to do?

Accepted Answer

Collect and publicly report data on mortgage applications, originations, and denials

Answer

Provide free housing counseling to every mortgage applicant

Answer

Offer identical interest rates to all borrowers who meet minimum qualifications

Answer

Insure all residential mortgages against default risk

Question 5

Under the TRID rule, what is the Closing Disclosure (CD) and when must it be provided?

Accepted Answer

A final statement of actual loan terms and closing costs provided at least 3 business days before settlement

Answer

A notice sent to applicants explaining why their loan was denied

Answer

A document revoking the borrower's three-day right of rescission on a refinance

Answer

An annual IRS form summarizing mortgage interest paid during the tax year

Question 6

What does the mortgage loan origination process encompass?

Accepted Answer

Taking a borrower's application and processing it through underwriting to final loan closing

Answer

Selling an existing mortgage loan in the secondary market to an investor

Answer

Collecting and processing monthly mortgage payments from existing borrowers

Answer

Foreclosing on a property after a borrower has defaulted on payments

Question 7

Under the Truth in Lending Act (TILA), what does the Annual Percentage Rate (APR) represent?

Accepted Answer

A standardized cost measure that includes the interest rate plus certain fees, expressed as a yearly rate

Answer

The simple interest rate charged on the outstanding mortgage principal balance

Answer

The interest rate charged by the Federal Reserve to member banking institutions

Answer

The maximum interest rate permitted under applicable state usury laws