SOMB 1 Practice Test Questions with Verified
Correct Answers
What is the process of transferring loan documents to a warehouse bank or an investor
called?
Shipping
Which of the following is a responsibility of the underwriter?
Accept or reject loan applications
Which of the following is a responsibility of the closer?
- conclude a transaction
- interact with the title and escrow companies
What does the Mortgage Banking Association Canon of Ethics say concerning
competition?
It supports healthy competition in the real estate finance industry
What does the Mortgage Bankers Association Canon of Ethics contain ethical standards
pertaining to?
- Honesty in advertising
- Confidentiality
- Compliance with laws
Factors that affect an investor's appetite for certain loan products?
- Risk of default or loss
- Exaggerated prepayment speeds
- Costs to service based upon structure
, - Risk for potential fraud
- Liquidity
A jumbo or super jumbo loan is considered to be a ____________________ loan
product, while a loan that is eligible for purchase by Fannie Mae or Freddie Mac is
most likely a _______________ loan product.
Non-comforming; conforming
FHA charges a _____________ to protect lenders in the event the borrower fails to
repay the mortgage loan
Mortgage Insurance Premium (MIP)
The increased number of payments that come with a bi-weekly mortgage results in the
following:
- Total interest cost on the loan is reduced
- Principal amortizes more quickly
- Loan is paid off faster
Adjustable Rate Mortgage characteristics
- Amount of monthly payments may change when the interest rate adjusts
- ARMs may have an annual and lifetime cap governing how much the interest rate may
change
An Alt-A product that does not cause the balance of the loan to decrease and does not
build equity in the home unless the value increases
Interest Only
Wholesale lenders can perfrom
Correct Answers
What is the process of transferring loan documents to a warehouse bank or an investor
called?
Shipping
Which of the following is a responsibility of the underwriter?
Accept or reject loan applications
Which of the following is a responsibility of the closer?
- conclude a transaction
- interact with the title and escrow companies
What does the Mortgage Banking Association Canon of Ethics say concerning
competition?
It supports healthy competition in the real estate finance industry
What does the Mortgage Bankers Association Canon of Ethics contain ethical standards
pertaining to?
- Honesty in advertising
- Confidentiality
- Compliance with laws
Factors that affect an investor's appetite for certain loan products?
- Risk of default or loss
- Exaggerated prepayment speeds
- Costs to service based upon structure
, - Risk for potential fraud
- Liquidity
A jumbo or super jumbo loan is considered to be a ____________________ loan
product, while a loan that is eligible for purchase by Fannie Mae or Freddie Mac is
most likely a _______________ loan product.
Non-comforming; conforming
FHA charges a _____________ to protect lenders in the event the borrower fails to
repay the mortgage loan
Mortgage Insurance Premium (MIP)
The increased number of payments that come with a bi-weekly mortgage results in the
following:
- Total interest cost on the loan is reduced
- Principal amortizes more quickly
- Loan is paid off faster
Adjustable Rate Mortgage characteristics
- Amount of monthly payments may change when the interest rate adjusts
- ARMs may have an annual and lifetime cap governing how much the interest rate may
change
An Alt-A product that does not cause the balance of the loan to decrease and does not
build equity in the home unless the value increases
Interest Only
Wholesale lenders can perfrom
