CRU EXAM 1 PRACTICE TEST BANK 2026
TESTED QUESTIONS WITH ANSWERS
GRADED A+
⩥ Loan Production. Answer: **Origination and manufacturing of loans
Origination - loan app is taken and originated
Processing - manufacturing starts. All information on the loan app is
verified and necessary documentation is collected
Underwriting - determine whether lending risk is acceptable
Closing - preparation and delivery of all legal documents to consummate
the loan with the borrower
⩥ Funding, Warehousing, Shipping. Answer: Funding - mortgage
banker's act of providing money for the loan
Warehousing - ensuring there is enough funds through warehousing to
close the loan
Shipping/QC - quality control
,Shipping/Delivery - sending the full loan file to the investor that is
purchasing the loan
⩥ Secondary Marketing. Answer: -Finding and maintaining a product
mix to fit the mortgage banker's business model
-Setting interest rates that a mortgage banker will offer
-Negotiating loan purchase commitments with investors
-Managing market risks
⩥ Loan Administration. Answer: -Receiving payments from borrowers
-Remitting funds received for P and I to the investors
-Managing the escrow account
-Handling of administrative functions relative to loan payoffs,
assumptions, loss mitigations, foreclosures
-Responding to customer inquiries
⩥ Mortgage Banker. Answer: Refers to companies that fund the loans at
closing and service the loans after closing. Bankers may either sell the
loans on the secondary market or keep them in portfolio (less common)
⩥ Correspondent. Answer: specialized type of mortgage banker whose
function is limited to the production of mortgage loans that are then sold
to other mortgage bankers under a specific commitment.
,⩥ Wholesaler. Answer: lender who specializes in the purchase and
servicing of mortgages obtained from other mortgage origination
entities, such as brokers, correspondents, thrifts, credit unions, or
commercial banks. They generally sell the loans on the secondary
market
⩥ Conduit. Answer: companies that purchase closed loans and pool the
closed loans for sale to investors as securities
⩥ Underwriter Responsibilities. Answer: 1. Analyze loan file for a
thorough understanding of the parties and transaction
2. Determine borrower's ability and willingness to repay the loan
3. Ascertain the property value and ensure that the value and condition
meet investor guidelines
4. Validate AUS conditions have been met
5. No red flags
⩥ 4 Cs of Underwriting. Answer: 1. Credit
2. Capacity
3. Capital
4. Collateral
, ⩥ Credit. Answer: **Determining if the borrower has the ability to make
the payments and if he/she will be willing to do so on a timely basis for
the duration of the loan term
-Determination is based on if the borrower has paid all his or her bills on
time in the past
-Utilizes credit scores from Equifax, Experian, Trans Union. Use the
middle score.
-The middle credit score will be bracketed. You can improve scores
through Rapid Rescore if an accuracy is present the borrower can fix it
with documentation. Paying something off or resolving outstanding debt
will increase the credit score
⩥ Capacity. Answer: Does the borrower consistently earn enough money
to be able to make the mortgage payments and is this likely to continue?
-Measures the borrower's ability to repay
-Housing to Income Ratio: expected to be 28%
-DTI: back end should be 36%
⩥ Capital. Answer: The borrower's available capital is an important
factor in a loan application. Capital can be in the form of:
TESTED QUESTIONS WITH ANSWERS
GRADED A+
⩥ Loan Production. Answer: **Origination and manufacturing of loans
Origination - loan app is taken and originated
Processing - manufacturing starts. All information on the loan app is
verified and necessary documentation is collected
Underwriting - determine whether lending risk is acceptable
Closing - preparation and delivery of all legal documents to consummate
the loan with the borrower
⩥ Funding, Warehousing, Shipping. Answer: Funding - mortgage
banker's act of providing money for the loan
Warehousing - ensuring there is enough funds through warehousing to
close the loan
Shipping/QC - quality control
,Shipping/Delivery - sending the full loan file to the investor that is
purchasing the loan
⩥ Secondary Marketing. Answer: -Finding and maintaining a product
mix to fit the mortgage banker's business model
-Setting interest rates that a mortgage banker will offer
-Negotiating loan purchase commitments with investors
-Managing market risks
⩥ Loan Administration. Answer: -Receiving payments from borrowers
-Remitting funds received for P and I to the investors
-Managing the escrow account
-Handling of administrative functions relative to loan payoffs,
assumptions, loss mitigations, foreclosures
-Responding to customer inquiries
⩥ Mortgage Banker. Answer: Refers to companies that fund the loans at
closing and service the loans after closing. Bankers may either sell the
loans on the secondary market or keep them in portfolio (less common)
⩥ Correspondent. Answer: specialized type of mortgage banker whose
function is limited to the production of mortgage loans that are then sold
to other mortgage bankers under a specific commitment.
,⩥ Wholesaler. Answer: lender who specializes in the purchase and
servicing of mortgages obtained from other mortgage origination
entities, such as brokers, correspondents, thrifts, credit unions, or
commercial banks. They generally sell the loans on the secondary
market
⩥ Conduit. Answer: companies that purchase closed loans and pool the
closed loans for sale to investors as securities
⩥ Underwriter Responsibilities. Answer: 1. Analyze loan file for a
thorough understanding of the parties and transaction
2. Determine borrower's ability and willingness to repay the loan
3. Ascertain the property value and ensure that the value and condition
meet investor guidelines
4. Validate AUS conditions have been met
5. No red flags
⩥ 4 Cs of Underwriting. Answer: 1. Credit
2. Capacity
3. Capital
4. Collateral
, ⩥ Credit. Answer: **Determining if the borrower has the ability to make
the payments and if he/she will be willing to do so on a timely basis for
the duration of the loan term
-Determination is based on if the borrower has paid all his or her bills on
time in the past
-Utilizes credit scores from Equifax, Experian, Trans Union. Use the
middle score.
-The middle credit score will be bracketed. You can improve scores
through Rapid Rescore if an accuracy is present the borrower can fix it
with documentation. Paying something off or resolving outstanding debt
will increase the credit score
⩥ Capacity. Answer: Does the borrower consistently earn enough money
to be able to make the mortgage payments and is this likely to continue?
-Measures the borrower's ability to repay
-Housing to Income Ratio: expected to be 28%
-DTI: back end should be 36%
⩥ Capital. Answer: The borrower's available capital is an important
factor in a loan application. Capital can be in the form of:
