RMLO Exam Prep: Questions With Solutions (Rated A+)
Conventional Loan Right Ans - any mortgage that is not guaranteed or
insured by the federal government. Any loan that is not FHA, VA, RHS
LLPAs Right Ans - Loan Level Price Adjustments: Additional fees assessed
to conventional mortgages on certain borrower and loan rick characteristics
UFMIP Right Ans - Up-Front Mortgage Insurance Premium; a one-time
charge by the FHA for insuring a loan.
Base Loan Amount x 1.75% = UFMIP
Minimum credit score for FHA LTV 96.3%: Right Ans - at or above 580
Minimum credit score for FHA LTV 90% Right Ans - 500 - 579
Ineligible credit score for FHA: Right Ans - less than 500
FHA interested 3rd party contributions Right Ans - 6% of the lesser of the
property's sales price or appraised value
FHA 203(b) program Right Ans - fixed rate program used to purchase or
refi 1-4 family dwellings
FHA 251 Right Ans - FHA ARM program
1, 3, 5, 7, & 10 year versions
FHA 234(c) Right Ans - for loans on condominiums
COE Right Ans - Certificate of Eligibility: Issued by Veteran's
Administration to qualified veterans that entitles them to VA guaranteed loans
DD-214 Right Ans - VA Separation Papers
1880 Right Ans - Request for COE
Two methods to qualify for VA Right Ans - - residual income method
- DTI Ratio
, VA DTI Right Ans - 41%
Exempt from VA funding fee: Right Ans - - service-connected disability
- surviving spouse of veteran who died in service
Subprime Borrower Characteristics Right Ans - - 2 or more 30 day
delinquencies within the prior 12 months
- one or more 60 day delinquencies within the prior 24 months
- foreclosure, repossession or charge off within the prior 24 months
- bankruptcy within the previous 5 years
- credit scores with high risk default
- DTI ratio of 50% or higher
Index Right Ans - an instrument for measuring changes in interest rates.
The lender's barometer of change in interest rates/
Most common indexes: Right Ans - - CMT
- COFI
- LIBOR
Margin Right Ans - Percent added to the index in order to calculate the
payment interest rate
The profit the lender will make above the index
The Guidance on Nontraditional Mortgage Product Risks defines
nontraditional mortgages as: Right Ans - Loan products which allow
borrowers to exchange lower initial loan payments for higher payments once
the loan has been amortized
Conforming Loan max IPC for LTV greater than 90% Right Ans - 3%
Conforming loan max IPC for LTV 75%-90% Right Ans - 6%
Conforming loan max IPC for LTV 75% or less Right Ans - 9%
Conforming loan investment property max IPC Right Ans - 2%
Loans that require counseling: Right Ans - - HOEPA
- HECM
Conventional Loan Right Ans - any mortgage that is not guaranteed or
insured by the federal government. Any loan that is not FHA, VA, RHS
LLPAs Right Ans - Loan Level Price Adjustments: Additional fees assessed
to conventional mortgages on certain borrower and loan rick characteristics
UFMIP Right Ans - Up-Front Mortgage Insurance Premium; a one-time
charge by the FHA for insuring a loan.
Base Loan Amount x 1.75% = UFMIP
Minimum credit score for FHA LTV 96.3%: Right Ans - at or above 580
Minimum credit score for FHA LTV 90% Right Ans - 500 - 579
Ineligible credit score for FHA: Right Ans - less than 500
FHA interested 3rd party contributions Right Ans - 6% of the lesser of the
property's sales price or appraised value
FHA 203(b) program Right Ans - fixed rate program used to purchase or
refi 1-4 family dwellings
FHA 251 Right Ans - FHA ARM program
1, 3, 5, 7, & 10 year versions
FHA 234(c) Right Ans - for loans on condominiums
COE Right Ans - Certificate of Eligibility: Issued by Veteran's
Administration to qualified veterans that entitles them to VA guaranteed loans
DD-214 Right Ans - VA Separation Papers
1880 Right Ans - Request for COE
Two methods to qualify for VA Right Ans - - residual income method
- DTI Ratio
, VA DTI Right Ans - 41%
Exempt from VA funding fee: Right Ans - - service-connected disability
- surviving spouse of veteran who died in service
Subprime Borrower Characteristics Right Ans - - 2 or more 30 day
delinquencies within the prior 12 months
- one or more 60 day delinquencies within the prior 24 months
- foreclosure, repossession or charge off within the prior 24 months
- bankruptcy within the previous 5 years
- credit scores with high risk default
- DTI ratio of 50% or higher
Index Right Ans - an instrument for measuring changes in interest rates.
The lender's barometer of change in interest rates/
Most common indexes: Right Ans - - CMT
- COFI
- LIBOR
Margin Right Ans - Percent added to the index in order to calculate the
payment interest rate
The profit the lender will make above the index
The Guidance on Nontraditional Mortgage Product Risks defines
nontraditional mortgages as: Right Ans - Loan products which allow
borrowers to exchange lower initial loan payments for higher payments once
the loan has been amortized
Conforming Loan max IPC for LTV greater than 90% Right Ans - 3%
Conforming loan max IPC for LTV 75%-90% Right Ans - 6%
Conforming loan max IPC for LTV 75% or less Right Ans - 9%
Conforming loan investment property max IPC Right Ans - 2%
Loans that require counseling: Right Ans - - HOEPA
- HECM
