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1. A veteran has the ability to transfer a portion of their entitlement to another
veteran.: False
2. 1. Gross rent may be considered effective income when an applicant is plan-
ning to rent their current residence after closing on the purchase of their new
home.: False
3. Based on the following scenario, does the borrower qualify within FNMA
guidelines?
PITI: $1,725 monthly
Income: $7,000
Debt: $700 car payment, $375 student loan ($2,250 balance), $170 credit card
payments ($1,530 balance: No
4. YTD paystubs will be required from a borrower that is self-employed (Sched-
ule C).: False
5. The maximum LTV for an FHA purchase is 97%.: False
6. If your borrower is being relocated and needs to close in 30-days, and their
spouse will not be moving for 3 months, the spouse's income can still be used
to qualify.: False
7. Based on the following scenario, does the borrower qualify within the FHLMC
guidelines?
PITI: $1,375 monthly
Income: $4,950 monthly
Debt: $350 car payment, $420 student loan ($4,500 balance), $75 credit card
payments ($850 balance).: No
8. One month of the borrower's current house payment must be included when
calculating the new loan amount for a cash-out refinance: True
9. The qualifying rate for a 7/1 ARM is 2% above the start rate.: False
10. Churning schemes usually involve falsified down payment amounts and
falsified appraisals.: False
11. A borrower can use a credit card to pay for their required down payment: False
12. A borrower's income is a factor considered when determining the principal
limit (maximum loan amount) for a reverse mortgage.: False
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13. A 30-year conventional loan with an 87% LTV would require 25% mortgage
insurance coverage.: True
14. A borrower that is self-employed (Schedule C) will typically not be required
to provide a YTD paystub.: True
15. Loans with an LTV >80% will typically require mortgage insurance.
(FNMA/FHLMC): True
16. A fixed-rate second mortgage has the loan amount fully disbursed at closing.
Monthly payments are amortized over the term of the loan. Once the balance
is paid off the mortgage is closed.: True
17. A borrower must qualify at the note rate on a temporary buydown, not the
start rate.: True
18. A lender must notify an applicant of action taken within 30 days after receiv-
ing a completed application concerning the lender's approval of, counteroffer
to, or adverse action on the application.: True
19. FNMA and FHLMC are fully backed by the U.S. Government: True
20. The Correspondent Lender is the "end" lender in a mortgage banker's trans-
action: True
21. A stand alone second mortgage is obtained separately from a first mort-
gage.: True
22. Except for high-cost areas, the maximum loan amount on a 1-unit, single
family residence is $510,400.: True
23. When using automated underwriting for a FNMA loan, DU will determine the
borrower's reserve requirement for an investment property.: True
24. Gross rent may be considered effective income when an applicant is plan-
ning to rent their current residence after closing on the purchase of their new
home: False
25. HomeOne will allow up to 97% LTV for a primary residence, 1-Unit purchase
if at least one of the borrowers has not owned a home in the last 3 years. A
borrower who has not owned a home in the last three years is considered a
first-time home buyer under HomeOne: True
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26. Relief Refinance Program loans are designed to help homeowners who are
current on their mortgage payments but are unable to refinance due to a drop
in their home value.: True
27. When adjusting a 1-Year ARM with 2/6 caps, the rate at the beginning of year
2 will be determined by the Start Rate + Annual Cap or the Fully-indexed rate,
whichever is less.: True
28. A veteran and a spouse may qualify together for 100% financing on a VA: True
29. A Loan Officer can locate the summary of the eligibility requirements for a
loan to be sold to a specific lender/investor in the lender specs.: False
30. A 2/1 buydown typically costs 2.5 discount points. Give or take .25%.: True
31. The P&I on an FHA loan is calculated using the TOTAL Loan Amount.: True
32. When considering a FHLMC loan, the maximum allowable ratios for the
owner occupant when using a non-occupant co-borrower are 35/43.: True
33. HOA dues should be added to the PITI for the purpose of calculating ratios
when qualifying a borrower.: True
34. An FHA 203(k) Standard program would require a HUD Consultant.: True
35. Unreimbursed business expenses can be located on Form 2106 of a borrow-
er's personal tax return.: True
36. A 3-Year ARM adjusts every 3 years.: True
37. Loan Product Advisor (LPA) is one of the most widely used automated under-
writing systems in the mortgage industry.: True
38. The age of the youngest borrower is considered when determining the
principal limit (maximum loan amount) for a reverse mortgage.: True
39. Residual income is the amount of income available for family support after
taxes and social security expense have been subtracted from the gross income
and after PITI and other long-term debt has been paid.: True
40. There is no minimum credit score needed to run/submit both HomeOne and
Home Possible® through an automated underwriting: True
41. Using the following information, answer the following conventional financed
MI loan question.
Sales Price = $185,000
Down Payment = 10%
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Credit Score = 635
20-year Fixed Rate
Owner-occupied
What is the Total Loan Amount and MI Factor?: $169,247/1.65%
42. Using the information provided, answer the following FHA question:
Sales Price = $245,600
Interest Rate = 4.25%
30-year fixed
Taxes = 1.5%
Homeowners Insurance = .3%
What is the PITI: Not 1554.72
43. Using the information provided answer the following rate/term refinance
question (FNMA).
Value = $370,000
Balance = $280,000
Current payment = $2,450
Interest Rate = 6.375%
Closing Costs = 2.5%
Prepaids = 1%
What is the new loan amount/P&I payment/LTV: Not 294,050
44. Your borrower is being relocated and needs to close on the purchase of
their new home in thirty days. Their spouse will not be moving for another six
months. How much income can be used for qualifying if the relocating bor-
rower is earning $92,000 annually and the trailing spouse is earning $36,000
annually? (FNMA): Not 7466
45. Using the information provided, answer the following 80/15/5 question.
Sales Price = $350,000
Interest Rate on a 30-year fixed rate 1st mortgage = 6%
Interest Rate on HELOC 2nd mortgage = 8.5%
Down Payment = 5%
Taxes = 1%
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Homeowners Insurance = .3%
What is the PITI using both mortgages?: $2,429.79
46. What is the largest house payment Ms. Joyce can have with her current
income of $92,650 per year considering she has a $525 car payment and $0
in credit cards? (FHLMC): Not 2779.50
47. Using the following information, answer the following conventional loan
question.
Sales Price = $143,000
Down Payment = $21,450
2/1 Buydown
20-year fixed rate
Owner-occupied
What is the LTV/MI Factor/Monthly MI payment?: Not 85%/.34%/34.44
48. What is the qualifying rate for a 3/1 ARM with a note rate of 4.25% and 2/6
caps? The fully-indexed rate is 6.38%: Not 5.25%
49. Using the information provided, answer the following FHA question:
Sales Price = $137,300
Interest Rate = 6.875%
30-year fixed
Taxes = 1.5%
Homeowners Insurance = .3%
What is the PITI?: NOt 1091.59
50. The borrower does not want their P&I payment to go above $1,250 per
month on a 30-year term. With an interest rate of 6.5%, what is the maximum
loan amount for this borrower?: 197750
51. Using the information provided, answer the following cash-out question
using FNMA: (do NOT round the loan down)
Value = $350,000
Current balance = $228,000
Current payment = $1,920
Cash requested = $20,000
Taxes = $270 monthly
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Homeowners insurance = $75 monthly
Closing Costs = 2.5%
Prepaids = 1%
What is their new loan amount and proposed monthly payment (PITI) based
on a 30-: Not 259,120
52. Which of the following loan options would be best for a borrower looking to
stay in the home for 3 years?: NOt 5/1 ARM
53. What is the maximum house payment Ms. Campese can afford with her
current income of $104,400 per year, $300 car payment, $350 student loan and
$50 credit card payment? (FHLMC): Not 2386
54. Chris earns $36,000 per year from his primary job. He also has a 2nd job in
the same line of work earning $11.25 per hour. He is only able to work 12 hours
a week on the 2nd job but has been doing so for 8 months. What is his monthly
qualifying income?: Not 3585
55. A veteran may be exempt from the VA Funding Fee if: Receives benefits for a service
related disability
56. Desktop Underwriter would result in a decision of Approve/Ineligible on a
loan with excellent credit which qualifies as a jumbo loan program: True
57. On an FHA 203(k) Limited program purchase: 35,000
58. A partners percentage of ownership and earnings can be located on Sched-
ule E part 11 of their personal tax returns: False
59. Unless a borrower can document extenuating circumstances they must wait
at least 7 years from a Chapter 7 bankruptcy: False
60. HOA dues are included in the PITI calculation: False
61. FHA loans have both a BASE Loan Amount and Total Loan Amount: True
62. The funding fee for an active duty veteran who has previously used their
eligibility and is purchasing a home with zero down is 3.60%: True
63. The maximum LTV for a 1 unit investment property is 95% (FHLMC): False
64. If a borrower qualifies for an agency loan of $295,750, FHA is a viable loan
option: True
65. Trailing spouse income can be used for qualifying purposes: False
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66. A borrower that is self-employed (Schedule C0 will typically not be required
to provide a YTD paystub: True
67. The following are types of renovation mortgages: Homestyle FHA 203K
68. Redisclosure of the Truth in Lending is required if the APR changes more
than % on a fixed rate loan: .125
69. What is the maximum seller contribution allowed for a primary residence
below 75% LTV (FNMA/FHLMC): 9%
70. On an FHA loan the upfront MIP should be included when calculating
cash-to-close: False
71. DU does not consider non-occupant income as qualifying income: True
72. A borrower's income is a factor considered when determining the principal
limit for a reverse mortgage: False
73. What is the maximum seller contribution allowed for a primary residence at
95% LTV (Fnma/Fhlmc): 3%
74. What is the funding fee for a veteran who has not used his/her eligibility and
plans on purchasing a home with 5% down payment: 1.65
75. What is the maximum seller contribution allowed for a primary residence at
85% LTV (FNMA/FHLMC): 3%
76. One month of the borrowers current house payment must be included when
calculating the new loan amount for a cash-out refinance: True
77. If a borrower qualifies for an agency loan of 325,000$, FNMA is a viable
option: True
78. The builder must provide an appraisal certificate to the mortgage company
on an FHA new construction loan prior to closing: False
79. A tax service fee is a non-allowable fee by FHA: True
80. If student loan payment is deferred, it does not have to be included: False
81. FHA guidelines require 3 years to have passed since a foreclosure, deed in
leau: True
82. The monthly MI for an FHA loan is calculated by BASE Loan Amount x
.85%/12: True
83. An origination fee may be paid by the borrower on an FHA loan: True
84. VA sets their own maximum loan limits: False
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85. The maximum LTV for an FHA cash-out refinance is 80%: True
86. A borrower is closing on a home on July 17th and needs to lock in their rate
60 days prior: 5/18
87. What is the funding fee for a veteran who has not used his/her eligibility and
plans on purchasing a home with 5% down payment: 1.65%
88. What is the maximum seller contribution allowed for a primary residence at
85% LTV: 6%
89. What is the qualifying rate for a 5/1 arm with a note rate of 3.75% and 2/6
caps? The fully indexed rate is 6%: 6%
90. AUS is the acronym for Automated Underwriting Sysytem: True
91. Reimbursed business expenses are to the borrower's gross income: added to
92. A borrower requesting a jumbo loan will qualify for an agency loan: False
93. A borrower purchased a home on Jan 15th and is moving in on March 2nd: 46
days
94. What is the qualifying rate for a 7/1ARM with a note rate of 6.00% and 2/6
caps? Fully indexed rate is 5.98%: 6.00%
95. After the borrower submits a complete loan application, the LE must be
delivered or placed: 3 Business days
96. Tenancy in Common is not an acceptible manner in which a title may be
held: False
97. Using the following information answer the conventional loan question.
Sales price= 143,000$: 85%/.25%/$25.32
98. If the VA maximum entitlement has been changed: True
99. Income from real estate or royalties can be located on Schedule E part1: True
100. Which of the following statements are False: The lender that buys loans from a mortgage
broker is called a correspondent lender
and lender and a mortgage bankers transaction is the wholesale lender
101. Flipping is a scheme where several people each: False
102. A veteran may exchange a portion of their entitlement for cash: False
103. A borrower is closing on a home on July 17th: 5/18
104. Based on a loan amount of $225,000:
105. A room addition is allowed under the FHA 203k limited program: Flase
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106. FNMA and FHLMC define a large deposit as any single deposit that exceeds
50%: True
107. The borrower must have 5% of their own funds when putting 15% down on
a primary residence FNMA: False
108. When calculating a borrower's income, unreimbursed business expenses
should be subtracted from the gross income: True
109. A wholesale Lender is the lender that buys loans from a mortgage broker-
: True
110. If a student loan payment is deferred, it does not have to be included in the
borrowers ratios: False
111. Rate Adjustments listed on a Mortgage Insurance company rate card are
added to or subtracted: True
112. HomeOONe will allow up to 97%LTV for a primary residence: True
113. It is ultimately the _________ responsibility to take a thorough loan applica-
tion to make sure all required documents are requested, and to effectively relay
the decision to the borrowers: Loan officers
114. A borrower paid semi-monthly and a borrower paid bi-weekly have the
same number of pay periods per year.: False
115. The qualifying rate for a 7/1 ARM is 2% above the start rate: False
116. On an FHA loan the upfront MIP should be included when calculating
cash-to-close.: False
117. The borrower must have 5% of their own funds when putting 15% down on
a primary residence. (FNMA): False
118. A 3-Year ARM adjusts every 3 years: True
119. A HELOC loan has an interest only payment: True
120. A borrower paid semi-monthly and a borrower paid bi-weekly have the
same number of pay periods per year: False
121. FHA Case Numbers are tied to the property, not the borrower.: True
122. Judgments and tax liens are required to be paid off at or prior to loan
closing. (FNMA/FHLMC): True
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123. A borrower's brother would like to give her money to help towards the down
payment of her new house. This would be considered....: A gift from a relative and would
require a gift letter, as well as proof that the funds have been transferred to the borrower's account.
124. VA sets their own maximum loan limits.: False
125. The monthly MI for an FHA loan is calculated by BASE Loan Amount x .85%
/12: True
126. Redisclosure of the Truth in Lending is required if the PAR changes more
than _____% on a fixed rate loan?: .125
127. If a veteran has previously used their VA entitlement and it has not yet been
restored, their COE may show an available amount which is less that the VA
maximum allowable entitlement: True
128. A room addition is allowed under the FHA 203(k) Limited program.: False
129. The maximum allowable ratios for an owner-occupant when using a non-oc-
cupant co-borrower per FHLMC guidelines is ______________.: 35/43
130. A borrower is considering a 1-year ARM with a note rate of 4.25%, 2/6 caps
and a margin of 2.5%. What would the borrower's interest rate be for year 2 if
the index is at 4.25%?: 6.25%
131. The builder must provide an appraisal certificate to the mortgage company
on an FHA new construction loan prior to closing.: False
132. All of the following documents must be provided by the builder to the
mortgage company on an FHA new construction loan prior to the loan being
cleared to close EXCEPT:: Appraisal Certificate
MUST BE PROVIDED: Certificate of Occupancy, Builder's 1-Year Warranty, Insulation Certificate
133. After the borrower submits a complete loan application, the LE must be
delivered or placed in the mail within how many days?: 3 business days
134. Which document is not necessary for the builder provide to the mortgage
company on an FHA new construction loan prior to the loan being cleared to
close?: Appraisal Certificate
135. Ms. Armstrong is paid an hourly wage of $17.50. She receives time and a
half for overtime (more than 40 hours per week) and has been averaging 50
hours every week, since starting with the company five years ago. Her current
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paystub from 7/15 of this year shows a YTD gross income of $26,260. Her W2
from last year shows $48,048 and the year before shows $46,116.
What is the monthly base income and monthly overtime income that would be
entered on the 1003? (Overtime not guaranteed): $3033/$915
136. Choose the correct relationship between the Name of the Report and mort-
gage interest rate tendencies.: When the CPI goes UP, Rates tend to go UP
When the GDP goes DOWN, rates tend to go DOWN
When the Unemployment Rate goes UP, rates tend to go DOWN
137. The following are types of renovation mortgages:: FNMA HomeStyle, FHA 203(k)
138. Unemployment income can not be used as qualifying income: False
139. What is the largest house payment Ms. Joyce can have with her current
income of $92,650 per year considering she has a $525 car payment and $0
in credit cards? (FHLMC): $2,161.83
140. What is the maximum seller contribution allowed for an investment prop-
erty at 80% LTV? (FNMA/FHLMC): 2%
141. Depreciation should be added to a borrower's income who owns several
investment properties.: True
142. Based on a loan amount of $225,000, how many years will it take your
customer to break-even if they choose to pay 1.5% in discount points to secure
an interest rate of 6.00% as opposed to zero points for a 6.25% rate?: 7.73 years
143. On an ARM, redisclosure of the Truth in Lending is required if the APR
changes more than _____%?: .25
144. A program description contains the summary of eligibility requirements for
a loan to be sold to a specific lender/investor.: True
145. Three different categories of non-US Citizens that may apply for a mortgage
loan or may not qualify are:: Resident Aliens, Non-Resident Aliens, Foreign Nationals
146. What is the qualifying rate for a 5/1 ARM with a note rate of 3.75% and 2/6
caps? The fully-indexed rate is 6.00%: 6.00%
147. Income or losses derived from partnerships can be located on Schedule K-1
of a borrower;s personal tax return.: False
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148. A borrower purchased a home on January 15th and is moving in on March
2nd. How many days from purchase to move in? (For non-leap years only): 46
days
149. What is the funding fee for a veteran who has not used his/her eligibility
and plans on purchasing a home with 5% down payment?: 1.65%
150. Desktop Underwriting (DU) would result in a decision of Approve/Ineligible
on a loan with excellent credit which qualifies as a jumbo loan program.: True
151. A non-arm's length transaction occurs when the borrowers or any other
party to the transaction have a direct relationship with another party to the
transaction (including, but not limited to, the employer, lender, broker, or ap-
praiser).: True
152. Borrowers must meet income limits per USDA guidelines: True
153. Which agency allows a borrower to qualify at the start rate for qualifying on
a fixed rate with Buydown?: NOT FNMA, FHA, or FHLMC so its VA
154. Churning schemes usually involve falsified down payment amounts and
falsified appraisals: False
155. FNMA and FHLMC define a large deposit as any single deposit that exceeds
50% of the borrower's total monthly qualifying: True
156. A partner's percentage of ownership and earnings can be located on Sched-
ule E part II of their personal tax returns.: False
157. Your borrowers are purchasing a home for $515,000 they are requesting a
$412,000 first mortgage and a $51,500 fixed-rate second what will their LTV,
second MTG let and down payment be if structure this way: 80/10/10
158. Using the information provided answer the following FHA question
Sales price: $185,000
Interest rate: 6 3/8%
30 year fixed rate
Taxes: $175
Homeowners insurance: $55
Closing costs: $4483
Prepaids: 1%
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Seller contribution: $3000
PITI and CASH TO CLOSE?: $1,493.11/$9,831
159. How many days must a borrower wait to close once they receive their initial
disclosures: Seven
160. A liability not listed on the credit report will typically need to be included on
the loan application: True
161. The following factors are considered when determining the principal limit
for a reverse MTG: All of the above
162. Your borrower is paid $1,950 bi-weekly and has been on his job for three
years. His wife works part time and makes 10.25 an hour. She works 20 hours
per week and has been on her job for two years. What is their combined
monthly income: $5,113
163. Which of the following is the correct list of charges included when calculat-
ing the borrowers cash to close: Down payment, closing costs, prepaids, discount points, MI paid in
cash (EUFMIP/FF)
164. VA space requires connection to a public or community water/sewer dispos-
al system if required by local building, planning, or health authorities: True
165. If the guidelines state that the maximum seller contribution is 3%, how
much can the seller contribute toward the borrowers cash to close with a sales
price of $179,450?: 5383
166. If the term of of an ARM Is five years or less, the qualifying rate is the start
rate +2% or the fully indexed rate, which ever is greater: True
167. What is the largest house payment that Mr. Coulter can have with his current
income of $75,500 per year considering he just bought a car with a payment
of $525 per month? (FNMA): $1740
168. Your borrowers are purchasing a home for $475,000. They are requesting a
$380,000 first mortgage and a $71,250 HELOC . What will their LTV and second
mortgage LTV and down payment be it's structured this way: 80/15/5
169. Based on the following scenario how much money will the borrower save
each month by choosing conventional loan with a HELOC second mortgage,
instead of a conventional loan with MI?
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Sales price equals $405,000 interest rate on a 30 year fixed rate first mortgage
equals 6.25% interest rate on HELOC second mortgage equals 8.5% down
payment equals 10%
Taxes equals $350 monthly homeowners insurance equals $105 monthly: $150.82
170. What is the PITI payment on a home priced at $360,000 with a 20% down
payment, 5.5% interest rate over 30 years with 1.5% for annual taxes and .3%
for annual homeowners insurance: $2,175.23
171. VA requires connection to a public or community water/sewer disposal
system if required by local building, planning, or health authorities: True
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