Mortgage Loan Origination Activities

For a construction-to-permanent loan, when must the initial Closing Disclosure be provided for the construction phase?

A title company provides an MLO with a detailed marketing analysis showing average days on market for properties in the MLO's territory. In exchange, the MLO agrees to refer at least 5 transactions per month. This arrangement is:

An appraiser discovers that a property has significant foundation issues that were not disclosed. The appraiser reduces the property value by $25,000 and includes detailed comments about the structural problems. The loan officer is upset because this will kill the deal. Under AIR, the loan officer:

A mortgage brokerage pays its MLOs a flat fee of $2,000 per closed loan, regardless of loan amount or terms. Additionally, the company pays a quarterly team bonus to all MLOs if the office meets certain customer satisfaction scores. Which statement is correct?

An MLO receives an application from a borrower on Tuesday at 4 PM. The borrower emails additional required documentation on Thursday at 10 AM, making the application complete. When must the Loan Estimate be delivered?

A borrower requests that all loan communications be sent only to their workplace address because they are in the process of divorce and don't want their spouse to see mortgage-related documents. How should the MLO handle this request?

An MLO receives a DU finding of 'Refer' with a message indicating 'Multiple Financed Properties.' The borrower owns two rental properties and is purchasing a primary residence. What does this DU message most likely indicate?

An applicant's credit report shows a Chapter 7 bankruptcy discharge date of exactly 2 years ago, but also shows a mortgage foreclosure with a completion date of 6 months ago. Which waiting period applies?

A borrower's loan application shows a debt-to-income ratio of 45%. What additional documentation requirement applies under the Ability-to-Repay rule?

An MLO provides pre-qualification based on a borrower's current employment but learns the borrower is starting a new job next month with a $10,000 salary increase. How should this information be handled?

A creditor offers the following loans to a qualified borrower: 30-year fixed at 6.5% with $2,500 points, 30-year fixed at 7.0% with $500 points, and 5/1 ARM at 6.0% with $1,000 points. If the borrower wants to avoid adjustable rate features, which loan should be presented as the lowest rate without risky features?

An MLO issues a pre-approval letter that states 'subject to satisfactory appraisal and final underwriting approval.' The borrower uses this letter to make an offer, but the appraisal comes in $15,000 below the purchase price. What is the lender's obligation?

How long is a typical pre-approval letter valid?

A borrower's credit score drops from 740 to 680 between the initial application and underwriting review. This change affects the interest rate from 4.25% to 4.75%. What action must the lender take regarding the Loan Estimate?

A lender discovers that the property taxes used in the initial Loan Estimate were understated by $150 per month. This discovery is made 15 days after the Loan Estimate was provided. What action is required?

A borrower has a 30-day rate lock at 6.5% that expires in 5 days. Interest rates have dropped to 6.0%. What is the borrower's best option?

During an automated underwriting submission to DU, the system returns a message stating 'Property Type Not Eligible.' The property is a single-family home built in 1975. What is the most likely reason for this message?

A mortgage broker tells an appraiser that the property 'needs to come in at $350,000 because that's what the borrower paid for it.' This statement:

A borrower wants to refinance their current mortgage to access $50,000 in cash for home improvements. The new loan will have a 0.25% higher interest rate but the same term. What additional documentation is required to demonstrate tangible net benefit?

A borrower receives a gift of $25,000 from their employer as part of an employee assistance program. What documentation is required beyond the standard gift letter?

A loan originator is working with a borrower who qualifies for only two loan products from the creditor's available options. How many loan options must be presented to comply with anti-steering requirements?

A borrower submits a mortgage application on Monday at 2:00 PM. The lender determines the application is complete on Wednesday at 10:00 AM. What is the latest day the Loan Estimate must be delivered to comply with TRID requirements?

During the loan process, an MLO discovers that the lender has made an error that benefits the borrower by reducing their interest rate. What does good faith and fair dealing require?

An MLO sends a marketing email to potential borrowers advertising mortgage rates. What information must be included in this communication?

Which statement about pre-approval letters is most accurate?

A borrower's credit score dropped 45 points between the initial application and final underwriting due to a new collection account. The borrower claims no knowledge of this debt. What is the MLO's best course of action?

A lender's appraisal management company (AMC) maintains a panel of approved appraisers. The AMC removes an appraiser from the panel after the appraiser consistently provides valuations that are lower than expected. This action is:

A borrower's current mortgage has a 6.5% interest rate and 25 years remaining. A lender offers to refinance to a 6.0% rate with 30 years. Which factor would BEST demonstrate tangible net benefit?

When calculating qualifying income for a borrower who receives both W-2 wages and 1099 income, which approach is most appropriate?

A borrower submits a loan application on Friday evening through an online portal. The lender's system automatically generates a Loan Estimate. When must this Loan Estimate be delivered to comply with TRID requirements?

An MLO is comparing a conventional loan with PMI versus an FHA loan for a borrower with 5% down payment. The conventional loan rate is 4.0% with 0.5% PMI, while the FHA rate is 4.25% with 0.85% MIP. What additional factor is crucial for an accurate comparison?

During the loan origination process, a borrower's credit score drops from 740 to 680 due to a new credit inquiry, but this change occurs after the Closing Disclosure has been provided and before closing. What documentation requirement applies?

A self-employed borrower provides bank statements instead of tax returns for income verification. Under what circumstances would this alternative documentation be considered acceptable for QM compliance?

A borrower has $50,000 in a joint account with their spouse who is not on the mortgage application. What documentation is typically required to use these funds?

A borrower receives a Loan Estimate on Friday at 3 PM via email. The following Wednesday, they discover the property needs a specialized environmental assessment costing $800, which was not disclosed on the LE. What is the earliest the lender can collect this fee?

An investment property borrower asks about PMI options for their rental property purchase with 15% down. What should the MLO explain about PMI for investment properties?

A borrower wants to request PMI cancellation. Under the HPA, what LTV ratio must be reached for borrower-requested cancellation?

What must an MLO do if a borrower requests to proceed with a loan after receiving a Loan Estimate but before the required waiting period expires?

A lender establishes an appraisal management company (AMC) as a subsidiary. To maintain appraisal independence, the AMC must:

When comparing adjustable-rate mortgages, an MLO must disclose the worst-case scenario. For a 3/1 ARM starting at 2.75% with 2% annual caps, 5% lifetime cap, tied to 1-year Treasury + 2.25% margin, what would be disclosed as the maximum payment scenario?

For construction loans, lenders typically require inspections at various stages. Who usually conducts these inspections?

A borrower's elderly parent wants to provide a gift of $50,000 for the down payment but is unable to sign documents due to dementia. The parent's adult child has power of attorney. What is required for this gift to be acceptable?

What is the typical impact on a credit score when a borrower pays off and closes a credit card account that has been open for 10 years?

During pre-qualification, a self-employed borrower states their annual income is $100,000. For pre-approval, they provide tax returns showing $75,000 in adjusted gross income after business deductions. How should the MLO proceed?

On a $300,000 loan, the Loan Estimate shows $1,200 in origination charges. At closing, the actual origination charges are $1,150. The lender also charged an unexpected $100 application fee not disclosed on the LE. What is the tolerance violation amount?

An MLO receives an appraisal report that shows the property value is $10,000 below the contract price. The borrower asks the MLO to request a 'second look' from the appraiser. What is the MLO's appropriate response?

A veteran borrower is considering a VA loan versus a conventional loan with PMI. The property purchase price is $300,000 with a 5% down payment. Which comparison is most accurate regarding mortgage insurance?

Under the anti-steering provisions, which of the following represents the three categories of loan options that must be presented to a consumer?

In construction lending, what is the primary purpose of requiring a completion bond or performance bond?

A self-employed borrower's tax returns show the following: Year 1 net income $45,000, Year 2 net income $38,000. The borrower had $8,000 in depreciation expenses each year. What is the qualifying monthly income?