Mortgage Loan Origination Activities
UPDATED ACTUAL Exam Questions and
CORRECT Answers
Your borrower does not wish to complete the demographics questions in the Government
Monitoring section of the 1003. What should you do? - CORRECT ANSWER - Indicate
that the applicant chooses not to disclose and then complete the section based on visual
observation of the borrower during a face to face application
Which of the following would not be found on a credit report? - CORRECT ANSWER -
Payments made to creditors who do not send data to a repository
Why would a borrower pay discount points in conjunction with his/her loan transaction? -
CORRECT ANSWER - They would lower their note rate
Sue Johnson is a receptionist for a construction company. She receives bi-weekly pay in the
amount of $1,153.85. What is her monthly qualifying income? - CORRECT ANSWER -
$1,153.85x26/12 = $2,500
Bankruptcy information will remain on a consumer's credit report for: - CORRECT
ANSWER - 10 years
Which of the following pieces of personal information is a borrower asked to provide voluntarily
on the loan application? - CORRECT ANSWER - Race, ethnicity, and sex
Joan Johnson is a salesperson who is paid 100% commission. What type of documentation
would you ask her to provide as proof of her income for the loan qualification? - CORRECT
ANSWER - Tax returns for the past two years
Mr. Bob Brown earns $12.00 per hour and works 38 hours each week. His wife Matilda is paid
$680 bi-weekly as a medical technician. What is their combined monthly qualifying income? -
CORRECT ANSWER - (12.00x38x52)+(680x26/12) = $3,449.33
, Mr. Cyril Cagney is paid $1,800 semi monthly. What is his monthly qualifying income? -
CORRECT ANSWER - $1,800x2 = $3,600
James Smith has worked for the Perfect Transmission Installers for eight years. His annual base
salary is $52,000. For overtime hours, which he has averaged as six hours per week, he receives
double pay based on his per-hour wage of $25. James takes four weeks of paid vacation per year.
What is his monthly qualifying income? - CORRECT ANSWER -
($52,000/12)+($50x6x4) = $5,533.33
Which of the following best describes the LTV ratio? - CORRECT ANSWER - It is the
ratio of the borrower's principle loan balance to the appraised value of the property.
Which of the following real estate appraisal approaches considers the value of the property and
any improvements made? - CORRECT ANSWER - Cost approach
On which approach to appraisers place the most weight in reaching a value conclusion for
conforming loans? - CORRECT ANSWER - Sales comparison approach
Appraisals that use the sales comparison approach include which of the following? - CORRECT
ANSWER - Comparison of the value for three similar, recently sold properties
According to conforming guidelines, an appraiser may make net adjustments to comparables up
to ______ in a residential appraisal. - CORRECT ANSWER - 15%
A borrower has applied for a refinance on her property valued at $235,000. She currently has a
HELOC with a $47,000 limit and currently owes $25,850. The borrower has applied for a first
mortgage of $164,500. Which of the following LTV, CLTV, and HLTV are accurate based on
this information? - CORRECT ANSWER - ($164,500/$235,000) = 70% /
($164,500+$25,850) = 81% / ($164,000+$47,000) = 91%
UPDATED ACTUAL Exam Questions and
CORRECT Answers
Your borrower does not wish to complete the demographics questions in the Government
Monitoring section of the 1003. What should you do? - CORRECT ANSWER - Indicate
that the applicant chooses not to disclose and then complete the section based on visual
observation of the borrower during a face to face application
Which of the following would not be found on a credit report? - CORRECT ANSWER -
Payments made to creditors who do not send data to a repository
Why would a borrower pay discount points in conjunction with his/her loan transaction? -
CORRECT ANSWER - They would lower their note rate
Sue Johnson is a receptionist for a construction company. She receives bi-weekly pay in the
amount of $1,153.85. What is her monthly qualifying income? - CORRECT ANSWER -
$1,153.85x26/12 = $2,500
Bankruptcy information will remain on a consumer's credit report for: - CORRECT
ANSWER - 10 years
Which of the following pieces of personal information is a borrower asked to provide voluntarily
on the loan application? - CORRECT ANSWER - Race, ethnicity, and sex
Joan Johnson is a salesperson who is paid 100% commission. What type of documentation
would you ask her to provide as proof of her income for the loan qualification? - CORRECT
ANSWER - Tax returns for the past two years
Mr. Bob Brown earns $12.00 per hour and works 38 hours each week. His wife Matilda is paid
$680 bi-weekly as a medical technician. What is their combined monthly qualifying income? -
CORRECT ANSWER - (12.00x38x52)+(680x26/12) = $3,449.33
, Mr. Cyril Cagney is paid $1,800 semi monthly. What is his monthly qualifying income? -
CORRECT ANSWER - $1,800x2 = $3,600
James Smith has worked for the Perfect Transmission Installers for eight years. His annual base
salary is $52,000. For overtime hours, which he has averaged as six hours per week, he receives
double pay based on his per-hour wage of $25. James takes four weeks of paid vacation per year.
What is his monthly qualifying income? - CORRECT ANSWER -
($52,000/12)+($50x6x4) = $5,533.33
Which of the following best describes the LTV ratio? - CORRECT ANSWER - It is the
ratio of the borrower's principle loan balance to the appraised value of the property.
Which of the following real estate appraisal approaches considers the value of the property and
any improvements made? - CORRECT ANSWER - Cost approach
On which approach to appraisers place the most weight in reaching a value conclusion for
conforming loans? - CORRECT ANSWER - Sales comparison approach
Appraisals that use the sales comparison approach include which of the following? - CORRECT
ANSWER - Comparison of the value for three similar, recently sold properties
According to conforming guidelines, an appraiser may make net adjustments to comparables up
to ______ in a residential appraisal. - CORRECT ANSWER - 15%
A borrower has applied for a refinance on her property valued at $235,000. She currently has a
HELOC with a $47,000 limit and currently owes $25,850. The borrower has applied for a first
mortgage of $164,500. Which of the following LTV, CLTV, and HLTV are accurate based on
this information? - CORRECT ANSWER - ($164,500/$235,000) = 70% /
($164,500+$25,850) = 81% / ($164,000+$47,000) = 91%
