During a mortgage operations checklist, a sponsorship reviewer identifies an issue involving points and fee calculations. Which response is most compliant?
Correct Answer
A) Use points-and-fees totals before classifying the loan
Why this is correct: Points and fees are a critical calculation under federal rules (like QM, HOEPA) and affect loan classification (e.g., high-cost mortgage). They must be accurately totaled from all allowable sources (e.g., origination charges, broker fees) and compared to the loan amount to determine if thresholds are exceeded. Using the points-and-fees total is a necessary first step before classifying the loan type and applying corresponding rules. Why the other choices are wrong: "Apply a different loan-program rule without checking the file facts" is wrong because points-and-fees calculations are fact-specific and program rules vary; skipping fact-checking risks non-compliance. "Ignore product, occupancy, LTV, or eligibility limits because the borrower prefers the loan" is wrong because borrower preference does not override legal limits tied to points and fees. "Use the same treatment for all mortgage products without comparing program requirements" is wrong because different programs (e.g., QM vs. non-QM, FHA vs. conventional) have distinct points-and-fees caps and treatments. Exam tip: Always calculate the total points and fees first—it's a gateway step for determining APR, QM status, and HOEPA coverage.
Why This Is the Correct Answer
The correct response is "Use points-and-fees totals before classifying the loan" because Points and fees can affect APR, HOEPA, QM, and borrower cost calculations.
Why the Other Options Are Wrong
Option B: Apply a different loan-program rule without checking the file facts.
Apply a different loan-program rule without checking the file facts. is not correct because it does not apply the rule tested by this file scenario.
Option C: Ignore product, occupancy, LTV, or eligibility limits because the borrower prefers the loan.
Ignore product, occupancy, LTV, or eligibility limits because the borrower prefers the loan. is not correct because it does not apply the rule tested by this file scenario.
Option D: Use the same treatment for all mortgage products without comparing program requirements.
Use the same treatment for all mortgage products without comparing program requirements. is not correct because it does not apply the rule tested by this file scenario.
Memory Technique
points and fee calculations: identify the rule being tested, then choose the action that documents or applies that rule before the file moves forward.
Exam Tip
Match the file facts to points and fee calculations; do not choose an exception or shortcut that skips the required rule.
Common Mistakes to Avoid
- -Choosing an internal exception instead of the governing rule
- -Treating preliminary or informal facts as a substitute for required documentation
- -Answering from a familiar but unrelated mortgage topic
More Mortgage Knowledge Questions
In a closing-readiness check, a risk reviewer sees facts tied to TILA Truth in Advertising. What should the file reflect?
In a training scenario, a trainee asks which official source controls FHA single-family origination policy. What action best follows the rule?
A compliance analyst compares the file facts with LTV Ratio Calculation during a licensing team review. Which conclusion is accurate?
A branch manager asks about a loan file because a trainee asks which official source controls FHA single-family origination policy. What should happen?
The loan team compares the file facts with ARM Cap Structures during a borrower follow-up call. Which conclusion is accurate?
A borrower has a 30-year fixed-rate mortgage with monthly principal and interest of $1,450. Property taxes increase, and taxes are paid through escrow. What can happen to the total monthly payment?
A loan has an outstanding principal balance of $240,000 and a 6% annual interest rate. Using simple monthly accrual, how much interest accrues for one month?
An annual escrow analysis for a current borrower shows a $780 shortage. One month's escrow payment is $600. The servicer elects to require repayment over the shortest installment period permitted by Regulation X for this shortage. What schedule is permitted?
What does an amortization schedule show for each scheduled payment?
A monthly principal-and-interest payment is $1,800, of which $1,250 is interest. How much principal is paid that month?
People Also Study
Federal Mortgage-Related Laws
24% of exam
Mortgage Loan Origination Activities
27% of exam
Ethics, Fraud & Consumer Protection
18% of exam
Uniform State Test Content
11% of exam
Related Study Resources
Previous Question
An originator quotes a veteran a conventional payment including PMI and a VA payment including PMI, and cannot say why both carry it. What is wrong with the comparison?
Next Question
A borrower compares two fully amortizing fixed-rate loans of $300,000 at 6.5% annual interest, one over 15 years and one over 30 years. Assume monthly payments, no fees, no prepayments and both loans paid on schedule through maturity. How do the 15-year loan’s monthly principal-and-interest payment and total interest compare with the 30-year loan?