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98 Cards in this Set
- Front
- Back
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Required by RESPA |
GFE |
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Outlines exactly how the lender figures out the APR of a loan? |
Regulation Z |
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Provides the preparation necessary to provide a TIL Statement to the borrower? |
Regulation Z |
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Provides a list of all the costs associated with the loan? |
GFE |
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Requires that all Prepaid Finance Charges must be included in the calculation of the APR of the loan. |
Regulation Z |
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list of Prepaid Finance Charges? |
are but not limited to : Origination Fee, Discount Fee, Tax service, reserves, and closing fee |
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What Act reduces the incidences of identity theft? |
FACTA |
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When did The Patriot Act Information Disclosure become a required document? |
October 1, 2003 |
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Additional information required by Patriot Act Information Form |
Borrower and co-borrowers drivers license numbers, passport information, and any military, green card, immigration card, and government identification if applicable, some form of picture identification. |
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What is the difference between the Borrowers Notification and Authorization Disclosure, and the Borrowers Certification and Authorization Disclosure? |
The Borrowers Notification and Authorization Disclosure contains at the bottom a section called Estimated Fees under which is listed all of the fees associated with processing the mortgage loan. These are known as 3rd party provider fees and can vary dramatically from state to state. |
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Washington Purchase Money Borrower Notification |
Gives the borrower the right to refuse a copy of the appraisal given for the property. |
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Appraisal Disclosure |
Is when a borrower is buying or refinancing a property and needing a mortgage loan. The property needs to be appraised. Borrower has right to a copy of the appraisal per the Appraisal Disclosure. |
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Anti-Coercion Statement and Washington Choice of Insurance Notice |
When the borrower signs the Anti-Coercion Statement, he or she understands and agrees to the fact that the borrower has the right to choose any insurance company he or she prefers to carry the homeowner's insurance. |
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The PMI - Initial Disclosure for Adjustable Rate |
1. Tells the borrower that the mortgage loan is an Adjustable Rate Mortgage 2. Tells the borrower that it will include Private Mortgage Insurance |
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The PMI - Initial Disclosure for Fixed Rate Mortgages |
Tells the borrower that when he or she decides to lock in the fixed interest rate for the loan, PMI will be included with the loan. |
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The Adjustable Rate Disclosure |
Informs the borrower that over the course of the loan the interest rate may increase. |
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The Balloon Loan Disclosure |
Tells the borrower that there is a set date when any balance on the loan will be due and must be paid at that set date. |
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Request for Copy of Transcript Tax Form |
aka 4506 (not a disclosure) gives the lending company permission to access and obtain the borrowers financial tax records directly from the IRS. |
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Rescindable loan transaction and dwelling loan transaction are both what? |
mortgage loans that are closed end, meaning they have fixed interest rates over the term of the loan. Rescindable means they will reside in the home, dwelling meaning the homeowner will not use the property as his or her primary residence. |
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FHA does not guarantee loans but rather...? |
Insures them, This means the borrower must pay an Upfront Mortgage Insurance Premium. |
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The FHA loans offer a LTV of how much? |
98% |
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VA loans offer a LTV of how much? |
100% |
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Because VA loans are guaranteed, the borrower is not required to _____? |
pay an Upfront Mortgage Insurance Premium. Instead, borrowers of a VA loan must pay a Veteran's Administration Funding fee. This is a one time payment added onto the Base Loan Amount. |
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Conforming Loans are mortgage loans that follow the standards, procedures, and guidelines put forth by ______? |
the Federal Home Loan Mortgage Corporation (FHLMC) and the Federal National Mortgage Association (FNMA). Fannie-Freddie guidelines. |
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Lenders offering conforming loans are offering what? |
The best/lowest interest rate and the best loan terms. This being why most borrowers want a conforming loan. Credit history, biggest factor. |
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Purchase loans usually have a LTV of around? |
95-107 percent |
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Rate/term Refinance Loan |
First goal is to get a better interest rate on the existing loan, while the other goal is to change the term, or length, of the loan. |
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To calculate the total amount owed on a Rate/Term Refinance loan....? |
add together the payoff amount for the mortgage loan (including a second mortgage if applicable) to the cost and fees needed to fulfill the Rate/Term loan. This is the new amount owed on the loan. |
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What is HELOC? |
Home Equity Line of Credit, Open End Loan. |
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Periodic Interest Rate Cap is |
Maximum rate and minimum rate to which it can adjust |
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What are the documents needed for Conforming Loans? |
Job history past two years, Pay stubs for work, W2 forms for two years of employment, tax return info past two years, business license if self-employed, a minimum of one month bank statements, a Divorce Decree and Property Settlement Statement, child support evidence of payment, bankruptcy in last 2-4 years paperwork, if borrower rented in past 2 years landlord's contact information |
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No Ratio - No Income Qualification loan (NIQ) |
borrower does not have to provide proof of income |
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Stated Income loan |
Borrower verbally tells loan officer their income without documentation, mostly used by the self employed |
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No-Doc loan |
Borrowers with high credit score and history. This loan does not require any information or supporting documentation about the borrower's assets, income, or even the borrower's employment history. High interest rate. |
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Reserve Mortgage |
Option for borrowers who are at least 62 years old. When borrower has built up equity from being a homeowner for so many years. Lender pays the borrower. Equity is converted to cash and paid to the borrower each month. The borrower must pay the loan entirely, including interest, when they decide to sell or die. No proof of income or any credit history usually needed. |
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When a Loan-to Value Ratio on a conforming loan is higher than 80%, what is usually automatically included with the loan? |
Private Mortgage Insurance |
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Combination Loan |
In order to avoid PMI (higher monthly mortgage payments) the loan officer can put together a combination loan. |
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If a borrower is building a building from the ground up, he or she will be required to take out which two types of loans? |
The first loan is a Construction or Interim Loan; for construction phase. After completion a borrower will refinance the first loan and take out an End Loan (aka Take Out Loan). After refinance the interest rate will decrease as the risk decreases. |
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This is when money is put aside to pay for the repairs when the repairs cannot feasibly occur until after the loan closes. |
Escrow Holdback (Repairs must be minor and should not affect the safety of property. |
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What type of mortgage is issued when the borrower outright owns one property, but wants to take out a loan for a second property? |
Blanket Mortgage |
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What action is taken if the borrower is slacking on the monthly payments of a loan? |
Acceleration clause |
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Points |
Percentage of total loan a lender is charging a borrower. In Eighths |
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Where are late payments recorded? |
credit report |
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What is the actual value on a property that a person owns called? |
Equity |
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A property that is used for both residential and business purposes is called? |
Mixed-Use Property |
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Private Mortgage Insurance protects who? |
The lender when a borrower defaults on a loan. |
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No Cost loans |
Wont pay costs listed on the GFE |
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Table funding |
The mortgage company will close on the loan instead of the lender. At the time funding is required, the mortgage company will transfer the loan into the lenders name, and the lender the funds the loan. |
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Who determines the maximum loan amount for a Reverse Mortgage? |
The county where the property resides. |
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Gross Monthly Income |
Assessed before taxes, and other deductions, such as 401k and child support. |
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What is Ratio Analysis and Housing Ratio? |
Gross Monthly Income is compared to the borrowers monthly rent payments and/or to the borrowers mortgage payments, this determines the borrowers Housing Ratio (front end ratio). Next, the Gross Monthly Income is compared to how much the borrower is paying to creditors each month (in the form of car payments, medical bills, etc.). This is the Total Debt Ratio (back end ratio). After these are calculated and a ratio is made, the LO can compare the numbers to the ratios set forth by lenders as to what qualifies for a loan. |
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What are the two types of automated underwriting? |
The first is Desktop Underwriting (DU) which is based solely on the rules by FNMA. Second is Loan Prospector (LP) which is based on rules set by FHLMC |
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What are the five main types of verifications that the loan officer sends out for the loan to be approved? |
1. Verification of Employment 2. Verification of Mortgage 3. Verification of Rent 4. Verification of Deposit 5. Verification of Loan |
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When a lender allows the borrower to multiply his or her non-taxed income by a certain percentage, which would in turn allow the borrower to increase their monthly income by a significant amount, and thus help qualify the borrower. |
Gross Up |
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Down payment usually consists of what percentage of the loan? |
3-5% |
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Residence documentation should include: |
Copy of a recent mortgage payment, a copy of an escrow statement, a copy of the Note signed at the closing, a copy of the Declaration page of the homeowners insurance, and contact information for the insurance agent. For every residence in the past two years. |
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What are the 3 main types of Bankruptcy? |
Chapter 7. So much debt that he or she cannot pay off the debt, judge orders person free and clear of all or specified amount of debt. Chapter 13. Is when a judge is able to combine all the payments the person should be paying each month into one payment. Chapter 11. Small businesses, proprietors, and partners who want to declare bankruptcy. |
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When a borrowers housing costs increase by 30% or more, the lender will refer to this situation as what? |
Payment Shock |
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Rolling Late |
When a borrower has a late payment after 90 days |
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Anyone who helps the lender by providing services for the completion of the loan. |
Third party providers |
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Residential Loan Application |
-Four page form completed by loan officer -Included in the borrowers loan file -Includes essential info helping lender decide if borrower qualifies for the loan -Helps loan officer find the best loan with the best interest rate and terms -Has 10 sections 1.Type of Loan info 2.Subject Property info 3.Borrower info 4.Borrower's Employment History 5.Housing Expenses 6.Assets and Liabilities 7.The Transaction 8.Declarations 9. Information for Government monitoring purposes. 10. Sources of Income
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RLA First Section Explains: |
Explains the type of loan, amount of the loan, the interest rate, the term, and whether the loan will be fixed, an adjustable rate, or graduated payment plan. If not all info is known then the LO makes the best estimate to complete the RLA. Numbers could change in the future even after the borrower signs it. |
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RLA Second Section Provides: |
Provides info about the subject property, both the street address and legal address of the property need to be provided, as well as the number of units of the property and the year it was built. Needs to be specified if the loan is a construction loan or refinance loan. If its a refinance loan then additional information is needed such as original date of purchase and the outstanding balance. A description of improvements made to the home, the legal names to be put on the title, and the source of funds to ay for costs and fees associated with the loan round out this section. |
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RLA Third Section Asks: |
Borrowers name, SSN, telephone number, birthdate, borrowers years of schooling completed, addresses resided in past 2 years, contact information of all landlords, mailing address. |
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RLA Fourth Section Requires: |
Borrower and Co-borrower's Employment history past 2 years, if self employed the borrower's title, type of business and the company telephone number must be provided. |
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RLA Fifth Section: |
Monthly Income and Combined Housing Expense Information. Monthly Income section includes base salary, any overtime salary, bonuses, and commissions. Then money received from investments each month such as stocks, bonds, trust fund money, rental income. Also child support, SS, or retirement. Combined Housing Expense as for rent payment each month, or mortgage payment, and insurance. |
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RLA Sixth Section: |
Loan officer should calculate the net worth by subtracting assets from liabilities. |
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RLA Seventh Section: |
Details of Transaction. This section compares and matches info on the GFE. |
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RLA Eighth Section: |
13 yes or no questions asked to the borrower. |
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RLA Ninth Section: |
Acknowledgement of Agreement. Asks borrower to read a paragraph and then sign. Agrees to terms and conditions. Says false info can be prosecuted. |
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RLA Tenth Section: |
Used by the government to make sure that the lender is complying to the laws and procedures set forth by various disclosures. This section asks for the sex, race, and ethnicity. |
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10-Month Rule |
If the borrower is consistently paying on an account and will be paid off in 10 months then it does not need to be listed under the borrower's liabilities. |
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The Underwriting Information section refers to what? |
Any information needed to qualify the borrower for the loan, as well as information used to figure the LTV ratio. |
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Delivery Date section: |
Needs to know the number, not names of borrowers on loan. Age and if they are first time buyers. Year the property was built. |
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Property Profile |
Obtained from title insurance companies. Contains 3 sections of info; the Deed of Trust which includes the legal address and all sellers of the property, the second is called Plat Map which gives detailed aerial-like view of the surrounding area of property, the third is Tax Assessors page or MetroScan page which includes ownership, loan, tax, characteristic, and sales information. |
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Any accounts that have a history of delinquent payments will go where? |
In the Derogatory Section of the credit report |
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If other companies have looked at the credit report where will that be listed? |
Inquiry information section |
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If a person has opened a line of credit using a different name where would that be found? |
Bureau Statement Section |
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Rate/Pricing Sheet |
Tells what interest rates a LO can offer a borrower depending on the type of loan that the borrower is qualifying for. Tells the LO how much money he or she will be making off the loan. This is called a Rebate. |
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The Title Insurance Policy protects who? |
Both the borrower/homeowner and the lending company from any problems that may arise in connection with the title of the home. |
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A Title Insurance Policy can offer which two types of insurance or coverage plans? Which also are connected to ALTA (American Land Title Association) |
The first type is standard coverage which offers the holder of the policy insurance on items that have been recorded on the title. The second type is extended coverage which offers the owners protections on items that have been recorded, as well as anything that has not been recorded on the title. Extended coverage is more expensive. |
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What is ALTA? |
American Land Title Association loan Policy. ALTA is the head of the title insurance for the US and is responsible for passing laws, setting standards and guidelines, and enforcing rates and fees in the title insurance industry. |
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Full Residential Appraisal |
aka 1004 form. Used mainly. Tells how much the property is worth in the current market. |
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Limited Appraisal |
aka Drive by Appraisal or 2055 form. Interior not inspected. |
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Straight Note |
Borrower's monthly mortgage payments are going directly towards paying off the interest associated with the loan over the loans term. |
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Fully Amortized Note |
Borrower's monthly mortgage payment is paying off the principal balance of the loan and the interest associated with the loan. |
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What are the other names that the Deed of Trust can be called depending on the state? |
Deed, Contract for Sale, and Security Instrument. |
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What are the two important parts of the Deed of Trust? |
First it promises that the subject property will be held as collateral on the Mortgage Note. Second it names the Trustor, the Trustee, and the beneficiary associated with the property transaction. |
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Who is the Trustor? |
aka the Mortgagor, is the borrower of the loan and the person paying the note, or the mortgage. |
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Who is the Trustee? |
The person who holds the title to the subject property until the loan on the property is paid off. |
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Who is the Beneficiary? |
aka the Mortgagee, is the lender of the loan. |
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More info on the Good Faith Estimate: |
informs the borrower that there are some stipulations associated with the costs and fess listed in the estimate. Costs and Fees may change. This is only an estimate. |
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Items Payable in Connection with the Loan |
Is a list of items found on the GFE that are charged by the mortgage company to the borrower if the borrower chooses that particular mortgage company to process the loan. Including origination fee, discount fee, appraisal fee, cost of the credit report, pest inspection fee, mortgage brokers fee, tax service fee, processing fee, underwriting fee, wire transfer fee, flood certification fee, and any other fees the borrower will be responsible for paying. Only section dictated by the mortgage company rather tan lending or title company. |
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After the LO determines all costs and fees, including fees charged by the mortgage company, prepays, and reserves, the LO will total the loan costs. Which is called what? |
Estimated Total Closing Costs and Prepaid Items |
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Estimated Total Closing Cost and Prepaid Items |
Sales Price or Balance of refinanced loan plus closing costs. Then Subtract borrower's loan amount from that number. Earnest money is subtracted from that number. Finally any credits or deposits subtracted from the last number. This final figure is paid or given to the borrower at the time of closing the loan depending on it being negative or positive amount. |
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Prepays are what? |
paid before the loan closes. Four fee listed in the GFE. First is interest adjustment, second is MIP (percent is specified), third is Hazard Insurance paid one year in advance, and fourth is pro-rated county property tax (number of days and cost per month is specified) |
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HUD Settlement Statement specifies what? |
Important information about the loan including how much the loan is for, as well as all of the fees and costs incurred with the loan. It will state whether the borrower receives or pays any money at closing. Origination fee will be included (money the broker or lending company charges for processing the loan). HUD will also include the Rebate. |
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Certificate of Completion |
a 442 form, completed by an appraiser if the subject property has recently undergone construction. |
