Mortgage Origination Activities

Front 1

Contingency Clause

Back 1

If the buyer cannot get financing, the buyer may back out of the contract without penalty.

Hint 1

Just because an offer is made does not mean that the buyer will beable to secure financing.

Front 2

Prequalification

Back 2

This process normally looks at the buyer's income and asset information and determines the mortgage payment amount for which the buyer is likely to qualify.

Hint 2

Does not involve a check of the borrower's credit or verification of income.

Front 3

Preapproval

Back 3

For amore effective way to demonstrate the financial capacity of the buyer, the lender will get a credit report about the buyer and verify the buyer's income and assets

Hint 3

Loan approval will then be issued, contingent on the future appraisal and market conditions.

Front 4

Purchase Contract

Back 4

A copy of the accepted offer for the home being purchased.

Front 5

Residence History

Back 5

Past two years, including contact information for the lender, landlord or rental agent.

Front 6

Employment History

Back 6

For the past two years including W2's and copies of College transcripts if applicable should be available. If contract employee past two years of tax filings.

Hint 6

Proof of income

Front 7

Income History

Back 7

For the past two years, which include, paycheck stubs for the past 30 days, information about other sources, such as Social Security and disability. If self-employed copies of full tax returns .

Hint 7

Information about alimony or child support payments received are only considered if applicant wants the income to be considered as part of the qualification process.

Front 8

Asset Information

Back 8

Would include bank statements, 401K statements, valuation of personal property, vehicles owned (make, model, year), cash value of insurance policies, all real property owned, including outstanding mortgages.

Front 9

Liability Information

Back 9

Would include contact and account information and monthly requirements for all creditors. If an applicant is paying child support or alimony payments, those will need to be disclosed as well.

Hint 9

MLO should obtain copies of the applicant's credit report.

Front 10

DD-214, Certificate of Eligibility, or discharge papers

Back 10

Required if the applicant is applying for a VA loan.

Front 11

Copy of the sales contract

Back 11

If the applicant is selling a current residence or property, this should be made available.

Front 12

Uniform Residential Loan Application

Back 12

Is the Freddie Mac form 65 and the Fannie Mae 1003. It is commonly referred to as a "10-03".

Front 13

Forced Place Policy

Back 13

If the servicing agent (or the lender) places a hazard insurance policy on the property.

Front 14

Prepaid Interest

Back 14

Equals number of days remaining in the month times daily rate found by Loan amount times interest percentage divided by 365 days

Front 15

Agency Case Number

Back 15

Would be assigned by the FHA, VA, or RHS, but would be left blank for a conventional loan.

Front 16

Servicing Transfer Statement

Back 16

At least 15 days prior to the effective date the lender must send.

Front 17

Maximum Gross Adjustment

Back 17

Under Fannie Mae and Freddie Mac guidelines, ignoring whether the adjustment is positive or negative, the total to any one comparable sale cannot be more than 25%.

Front 18

Loan Estimate

Back 18

Required by RESPA, the Real Estate Settlement Protection Act

Front 19

Mortgage (or Trust Deed)

Back 19

Makes the property collateral for the debt.

Front 20

Promissory Note

Back 20

Obligates the borrower to repay the loan.

Front 21

Joint Tenancy

Back 21

Includes the right of survivorship, which means that upon the death of one party, title would automatically pass to the surviving joint tenant(s). While it is most commonly used between spouses, that is not a requirement.

Front 22

Conventional Loan

Back 22

Would use a maximum Housing Ratio of 28% and total debt service of 36% of the household income.

Front 23

Government Recording Charges

Back 23

Subject to the 10% error tolerance, and the initial deposit to the escrow account and the homeowners insurance premiums can change without any specific limitation.

Front 24

Subject Property Appraisals

Back 24

Appraisers must report and consider any prior sales for 3 yrs prior to the date.

Front 25

Comprable Properties

Back 25

Prior sales are reported and considered for one year after the date of the appraisal.

Front 26

Maximum Net Adjustment

Back 26

(Does not ignore whetherthe adjustment is positive or negative) is 15%

Front 27

Notice of Right to Appraisal Report

Back 27

Disclosure form is now incorporated into the Loan Estimate Form.

Front 28

FHA Real Estate Certification

Back 28

Used to certify the terms of the purchase and must be signed by both the buyer and the seller.

Front 29

Yeild Spread Premium

Back 29

The borrower might exchange a higher interest rate in return for lower closing costs.

Front 30

Purchase Transaction

Back 30

An owner's policy of title insurance would most likely be found in this type of mortgage loan.

Front 31

Transfer of Service Disclosure

Back 31

Is required by The Real Estate Settlement Procedures Act

Front 32

Accrued Interest

Back 32

The amount of unpaid interest due to a lender since the last interest payment.

Hint 32

If your mortgage payment is due on the first of each month, on the 15th of each month you would have one-half month of accrued interest.

Front 33

Alienation Clause

Back 33

If the property is sold, the Loan must be repaid at the time of the sale. Also is called a "Due on Sale" clause, which is more descriptive.

Hint 33

If a loan has this it is not an assumable loan.

Front 34

Alt-A Loans

Back 34

Werr initially designed for people who would have qualified under normal standards, except that they were deficient in one are, such as perhaps an inability to fully document their income, and so the loan was granted on the basis of "stated income", where the requirement to document the income was reduced or waived.

Hint 34

Sometimes appropriate for recently divorced, entrepreneurs, the self employed and those who are paid on commission.

Front 35

Annual Percentage Rate (APR)

Back 35

Required by the Truth in Lending Act (Regulation Z) and gives the borrower a better picture of the true cost of credit than just the interest rate on the loan.

Hint 35

Expresses the relationship between the total cost of borrowing and the amount financed in % terms.

Front 36

Assumable Loan

Back 36

If the borrower could purchase the property and just take over the exiating loan and it's payments, provided that the borrower may have to meet creditworthiness standards.

Hint 36

Will not have an alienation clause (Due on Sale)

Front 37

Balloon Payment (Balloon Loan)

Back 37

Is not fully amortized. When the final payment is reached, the borrower will have to repay the entire remaining loan balance, resulting in a significantly larger final payment.

Hint 37

Also found in partially amortized loans.

Front 38

Bi-Weekly Mortgage Plan

Back 38

Borrowers are often surprised to learn that this payment plan will result in significant savings and the loan being repaid in just over 22-25 years(depending on interest rate), rather than the full 30 yr term.

Front 39

Blanket Mortgage

Back 39

A loan that is secured by more than one parcel of land. They often have a partial release clause which states that every time the borrower replays a specified sum, the lender will release the lein on one of the lots.

Front 40

Buydown

Back 40

The lender is paid an extra amount upfront, in return for which the borrower is given a lower interest rate.

Front 41

Consumer Financial Protection Bureau (CFPB)

Back 41

Was created by the Todd-Frank Wall Street Reform amd Consumer Protection Act in a response to the financial crisis of 2008. Funded by the Federal Reserve Board.

Front 42

Conventional Loans

Back 42

Simply loans that are not issued by, insured by, nor guaranteed by the Federal Government or one of its agencies.

Front 43

Conversion Option

Back 43

Available in some ARM's, where the borrower can choose to convert the loan to a fixed rate Loan, rather than adjustable.

Front 44

Included in the Loan Estimate as part of the finance charge.

Back 44

VA funding fee, per diem interest, and origination charges are a part of the finance chlarge. The cost of the appraisal is not.

Front 45

Business Cards, Company Website, and Residential Mortgage Loan Application form

Back 45

The u,pique identifier of any person originatingresidential loan must be clearly shown on all the following documents.

Front 46

Refinance

Back 46

The satisfaction of an existing obligation and its replacement by a new obligation.

Front 47

Acceptable age discrimination

Back 47

Only if the applicant is too young to enter into a legally binding contract.

Front 48

Wire Transfer, Prepaidinterest, Mortgage insurance premiums

Back 48

Fees included in the calculation of the APR according to TILA.

Front 49

Junior Mortgage Loan = High-Cost

Back 49

When its nominal interest rate exceeds the APOR by more than 8.5%.

Front 50

Form 1003 Section I

Back 50

Type of Mortgage and Terms of Loan

Front 51

Form 1003 Section II

Back 51

Property Information and Purpose of Loan

Front 52

Form 1003 Section III

Back 52

Borrower Information

Front 53

Form 1003 Section IV

Back 53

Employment Information

Front 54

Form 1003 Section V

Back 54

Monthly Income and Combined Housing Expense Information

Front 55

Form 1003 Section IV

Back 55

Assets and Liabilities

Front 56

Form 1003 Section VII

Back 56

Details of Transactions

Front 57

Form 1003 Section VIII

Back 57

Declarations

Front 58

Form 1003 Section IX

Back 58

Acknowledgement and Agreement

Front 59

Form 1003 Section X

Back 59

Information for Government Monitoring Purposes