NATIONAL AND UST MORTGAGE PRACTICE EXAM 1
QUESTIONS | TESTED AND PROVEN ANSWERS |
LATEST UPDATE 2024/2025 100% (GRADE A+)
A borrower received $1,000 per month in rental income. How much of the income may be used to
qualify the borrower for a loan?
A. $1,000
B. $800
C. $750
D. $1,250
Ans>> C. $750
Generally, 75% of rental income may be used to qualify a borrower for a loan. This formula is
based on an industry standard that taxes, insurance, and maintenance costs will equal about 25%
of the income that a property generates. In this case, 75% x $1,000 = $750.
What is Freddie Mac's automated underwriting system called?
1
,A. Desktop Originator
B. Underwriter Assistant
C. Loan Product Advisor
D. AUS
Ans>> C. Loan Product Advisor
Freddie Mac's automated underwriting system is called Loan Product Advisor (formerly known as
Loan Prospector), while Fannie Mae's is called Desktop Underwriter.
Which of the following contains only items which should be used in calculating a borrower's debt-
to-income ratio?
A. Monthly rent expense on current home, credit card payment, car insurance
B. Car payment, boat payment, child support obligations
C. Property tax payment, utility payment, cable bill
D. Mortgage insurance payment, average grocery costs, electric bill
Ans>> B. Car payment, boat payment, child support obligations
2
,A debt-to-income ratio compares an applicant's total monthly debt to his or her total monthly
income. Total monthly debt would include simultaneous loans, debt obligations, alimony, and child
support. Typical living expenses (e.g., utilities, health and disability insurance, food, phone or
cable bills, etc.) are not included when calculating DTI.
Which of the following would NOT be required if a mortgage company wishes to utilize electronic
signatures on required disclosures?
A. Borrowers must be given the option to receive the disclosures in paper form
B. Borrowers must be able to withdraw their consent to receive the disclosures electronically
C. The company must record the IP address from which the documents were accessed
D. The company must disclose hardware and software requirements to borrowers
Ans>> C. The company must record the IP address from which the documents were accessed
Under the Electronic Signatures in Global and National Commerce Act (the E-SIGN Act), before
obtaining a consumer's consent, a financial institution must provide a clear and conspicuous
statement to consumers, informing them of their right or option to have the record provided or
made available on paper or in a non-electronic form. The statement must also explain the
3
, consumer's right to withdraw consent, including applicable conditions, consequences, and fees.
Consumers must also be provided with information about the hardware and software required to
allow them to access and retain the electronic records.
Under the S.A.F.E. Act, a licensed loan originator's responsibilities with regard to recordkeeping
include all of the following, except:
A. Not knowingly withholding, removing, or destroying any books or records
B. Making all of the licensee's records available to borrowers upon demand
C. Permitting interviews of principals, loan originators, and independent contractors by state
regulators
D. Making records and books available to the state regulator
Ans>> B. Making all of the licensee's records available to borrowers upon demand
Licensed loan originators and those required to be licensed must make records and books
available to their state regulator and permit interviews of officers, principals, employees,
independent contractors, agents and customers. They may not knowingly withhold, abstract,
remove, mutilate, destroy, or secrete any books, records, or other information during an
4
QUESTIONS | TESTED AND PROVEN ANSWERS |
LATEST UPDATE 2024/2025 100% (GRADE A+)
A borrower received $1,000 per month in rental income. How much of the income may be used to
qualify the borrower for a loan?
A. $1,000
B. $800
C. $750
D. $1,250
Ans>> C. $750
Generally, 75% of rental income may be used to qualify a borrower for a loan. This formula is
based on an industry standard that taxes, insurance, and maintenance costs will equal about 25%
of the income that a property generates. In this case, 75% x $1,000 = $750.
What is Freddie Mac's automated underwriting system called?
1
,A. Desktop Originator
B. Underwriter Assistant
C. Loan Product Advisor
D. AUS
Ans>> C. Loan Product Advisor
Freddie Mac's automated underwriting system is called Loan Product Advisor (formerly known as
Loan Prospector), while Fannie Mae's is called Desktop Underwriter.
Which of the following contains only items which should be used in calculating a borrower's debt-
to-income ratio?
A. Monthly rent expense on current home, credit card payment, car insurance
B. Car payment, boat payment, child support obligations
C. Property tax payment, utility payment, cable bill
D. Mortgage insurance payment, average grocery costs, electric bill
Ans>> B. Car payment, boat payment, child support obligations
2
,A debt-to-income ratio compares an applicant's total monthly debt to his or her total monthly
income. Total monthly debt would include simultaneous loans, debt obligations, alimony, and child
support. Typical living expenses (e.g., utilities, health and disability insurance, food, phone or
cable bills, etc.) are not included when calculating DTI.
Which of the following would NOT be required if a mortgage company wishes to utilize electronic
signatures on required disclosures?
A. Borrowers must be given the option to receive the disclosures in paper form
B. Borrowers must be able to withdraw their consent to receive the disclosures electronically
C. The company must record the IP address from which the documents were accessed
D. The company must disclose hardware and software requirements to borrowers
Ans>> C. The company must record the IP address from which the documents were accessed
Under the Electronic Signatures in Global and National Commerce Act (the E-SIGN Act), before
obtaining a consumer's consent, a financial institution must provide a clear and conspicuous
statement to consumers, informing them of their right or option to have the record provided or
made available on paper or in a non-electronic form. The statement must also explain the
3
, consumer's right to withdraw consent, including applicable conditions, consequences, and fees.
Consumers must also be provided with information about the hardware and software required to
allow them to access and retain the electronic records.
Under the S.A.F.E. Act, a licensed loan originator's responsibilities with regard to recordkeeping
include all of the following, except:
A. Not knowingly withholding, removing, or destroying any books or records
B. Making all of the licensee's records available to borrowers upon demand
C. Permitting interviews of principals, loan originators, and independent contractors by state
regulators
D. Making records and books available to the state regulator
Ans>> B. Making all of the licensee's records available to borrowers upon demand
Licensed loan originators and those required to be licensed must make records and books
available to their state regulator and permit interviews of officers, principals, employees,
independent contractors, agents and customers. They may not knowingly withhold, abstract,
remove, mutilate, destroy, or secrete any books, records, or other information during an
4
