Mortgage Loan Origination - ProSchools
UPDATED ACTUAL Exam Questions and
CORRECT Answers
All of the following are adverse actions EXCEPT
change in terms of existing credit.
refusal to grant the amount of credit requested.
denial of credit.
foreclosure. - CORRECT ANSWER - The correct answer is D. Adverse action is defined
in the law as a denial or revocation of credit; a change in the terms of an existing credit
arrangement; or a refusal to grant credit in substantially the amount or on the terms requested.
A VA borrower who has obtained a VA loan once can
have full eligibility restored to obtain a new VA loan if he has repaid the prior loan and sold the
property securing that loan.
assume a VA loan, but not obtain a new one.
never obtain another VA loan.
have full eligibility restored to obtain a new VA loan if his prior loan is still outstanding and has
been assumed by a financially qualified buyer. - CORRECT ANSWER - The correct
answer is A. An applicant who has used all or part of his entitlement for a VA loan can get it
back to purchase another home if: the prior property has been sold and the VA loan has been
paid in full; or a qualified veteran buyer has agreed to assume the outstanding balance on the VA
loan and substitute his entitlement for the same amount of entitlement the applicant originally
,used to get the loan; or one time only, the applicant has repaid the prior VA loan in full, but has
not disposed of the property securing that loan. An applicant will also have remaining
entitlement (but not restored entitlement) if his existing VA loan has not been paid off and has
been assumed by a qualified buyer.
Which of the following may make a loan directly to a borrower when credit is not otherwise
available?
FHA
VA
FNMA
USDA - CORRECT ANSWER - The correct answer is D. The USDA has a direct loan
program to make loans directly to creditworthy low-income households in rural areas when
lenders will not make such loans.
The pricing model used for subprime loans has been
cost-based.
index-based.
risk-based.
uniform. - CORRECT ANSWER - The correct answer is C. Under a risk-based pricing
model, mortgages are priced based on the underlying risk of the borrower. Borrowers with riskier
profiles pay higher prices. This has been the basis for subprime loans.
The period between rate changes in an ARM is called the
,changing period.
relief period.
adjustment period.
in-between period. - CORRECT ANSWER - The correct answer is C. The period between
rate changes in an ARM is called the adjustment period.
An acceleration clause in a note provides that
upon sale of the property the loan must be repaid, unless the lender gives consent otherwise.
upon repayment of the debt in full, the note and mortgage will be voided.
the entire loan balance is due upon default.
redemption of the loan will defeat a foreclosure. - CORRECT ANSWER - The correct
answer is C. The acceleration clause accelerates the payment schedule, causing the entire loan
balance to be due upon default.
Warning signs of loan problems, or possible fraud, are commonly called
yield spread premiums.
red flags.
risk analysis.
, multiplicity. - CORRECT ANSWER - The correct answer is B. "Red flag" is the term used
to describe a warning sign of fraud.
A qualified veteran wanting a VA loan
cannot obtain a VA loan if he has previously obtained a VA loan.
can borrow up to 95% of the appraised value of the property.
cannot pay more than the appraised value for a property.
can get a loan with zero down payment. - CORRECT ANSWER - The correct answer is D.
A borrower can borrow up to 100% of the appraised value. He can pay more than the appraised
value for a property, but cannot borrow the difference. He can use the VA program any number
of times, but unless he paid off the prior loans, the amount borrowed reduces his entitlement for
future borrowing.
A federal VA loan is
originated by the VA.
insured by the VA.
guaranteed by the VA.
funded by the VA. - CORRECT ANSWER - The correct answer is C. A federal VA loan
is guaranteed by the VA. This is similar to mortgage insurance. The loan is made by a private
lender.
UPDATED ACTUAL Exam Questions and
CORRECT Answers
All of the following are adverse actions EXCEPT
change in terms of existing credit.
refusal to grant the amount of credit requested.
denial of credit.
foreclosure. - CORRECT ANSWER - The correct answer is D. Adverse action is defined
in the law as a denial or revocation of credit; a change in the terms of an existing credit
arrangement; or a refusal to grant credit in substantially the amount or on the terms requested.
A VA borrower who has obtained a VA loan once can
have full eligibility restored to obtain a new VA loan if he has repaid the prior loan and sold the
property securing that loan.
assume a VA loan, but not obtain a new one.
never obtain another VA loan.
have full eligibility restored to obtain a new VA loan if his prior loan is still outstanding and has
been assumed by a financially qualified buyer. - CORRECT ANSWER - The correct
answer is A. An applicant who has used all or part of his entitlement for a VA loan can get it
back to purchase another home if: the prior property has been sold and the VA loan has been
paid in full; or a qualified veteran buyer has agreed to assume the outstanding balance on the VA
loan and substitute his entitlement for the same amount of entitlement the applicant originally
,used to get the loan; or one time only, the applicant has repaid the prior VA loan in full, but has
not disposed of the property securing that loan. An applicant will also have remaining
entitlement (but not restored entitlement) if his existing VA loan has not been paid off and has
been assumed by a qualified buyer.
Which of the following may make a loan directly to a borrower when credit is not otherwise
available?
FHA
VA
FNMA
USDA - CORRECT ANSWER - The correct answer is D. The USDA has a direct loan
program to make loans directly to creditworthy low-income households in rural areas when
lenders will not make such loans.
The pricing model used for subprime loans has been
cost-based.
index-based.
risk-based.
uniform. - CORRECT ANSWER - The correct answer is C. Under a risk-based pricing
model, mortgages are priced based on the underlying risk of the borrower. Borrowers with riskier
profiles pay higher prices. This has been the basis for subprime loans.
The period between rate changes in an ARM is called the
,changing period.
relief period.
adjustment period.
in-between period. - CORRECT ANSWER - The correct answer is C. The period between
rate changes in an ARM is called the adjustment period.
An acceleration clause in a note provides that
upon sale of the property the loan must be repaid, unless the lender gives consent otherwise.
upon repayment of the debt in full, the note and mortgage will be voided.
the entire loan balance is due upon default.
redemption of the loan will defeat a foreclosure. - CORRECT ANSWER - The correct
answer is C. The acceleration clause accelerates the payment schedule, causing the entire loan
balance to be due upon default.
Warning signs of loan problems, or possible fraud, are commonly called
yield spread premiums.
red flags.
risk analysis.
, multiplicity. - CORRECT ANSWER - The correct answer is B. "Red flag" is the term used
to describe a warning sign of fraud.
A qualified veteran wanting a VA loan
cannot obtain a VA loan if he has previously obtained a VA loan.
can borrow up to 95% of the appraised value of the property.
cannot pay more than the appraised value for a property.
can get a loan with zero down payment. - CORRECT ANSWER - The correct answer is D.
A borrower can borrow up to 100% of the appraised value. He can pay more than the appraised
value for a property, but cannot borrow the difference. He can use the VA program any number
of times, but unless he paid off the prior loans, the amount borrowed reduces his entitlement for
future borrowing.
A federal VA loan is
originated by the VA.
insured by the VA.
guaranteed by the VA.
funded by the VA. - CORRECT ANSWER - The correct answer is C. A federal VA loan
is guaranteed by the VA. This is similar to mortgage insurance. The loan is made by a private
lender.
