Loan Origination Activities Flashcards
7 cards from real Mortgage practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Loan Origination Activities flashcards as text
When a lender issues a loan commitment, what does this document signify?
Answer: The lender has agreed to fund the loan subject to specified conditions
A loan commitment is a formal lender agreement to fund the mortgage, typically contingent on conditions such as a satisfactory appraisal and clear title.
The Equal Credit Opportunity Act (ECOA) requires a lender to notify an applicant of a credit decision within how many days of receiving a completed application?
Answer: 30 days
ECOA requires creditors to notify applicants of action taken on a credit application within 30 days of receiving a completed application.
A lender's underwriter requests additional documentation 10 days after receiving a loan file. What is this request called?
Answer: A stipulation or condition of approval
Requests for additional items needed before loan approval are called stips or conditions of approval, and must be satisfied before closing.
Which federal law prohibits lenders from denying mortgage loans based on the racial or ethnic composition of a neighborhood?
Answer: Fair Housing Act (FHA)
The Fair Housing Act prohibits redlining and discrimination in residential lending based on race, color, national origin, religion, sex, familial status, or disability.
During origination, a lender 'locks' a borrower's interest rate. If rates drop significantly before closing, the borrower typically:
Answer: May pay a float-down fee to access the lower rate if the lock includes a float-down option
Standard rate locks fix the rate for the lock period; borrowers can only benefit from rate drops if they purchased a float-down option at lock.
For a purchase transaction, what is the MLO required to verify to confirm a borrower's source of funds for the down payment?
Answer: Bank statements showing sufficient funds and seasoning, plus explanation of large deposits
Underwriters require asset statements (typically 2 months) showing sufficient funds and seasoning, plus written explanations for large or unusual deposits.
Which origination activity is specifically prohibited under the SAFE Act for an individual acting as an MLO without a valid license or registration?
Answer: Taking a residential mortgage loan application or negotiating loan terms for compensation
The SAFE Act requires anyone who takes loan applications or negotiates residential mortgage terms for compensation to be licensed or registered as an MLO.