National and UST Mortgage Practice Exam 1
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1. A borrower received $1,000 per month in rental income. How much of the
income may be used to qualify the borrower for a loan?
A. $1,000
B. $800
C. $750
D. $1,250: C. $750
Generally, 75% of rental income may be used to qualify a borrower for a loan. This formula is based on an industry
standard that taxes, insurance, and maintenance costs will equal about 25% of the income that a property generates.
In this case, 75% x $1,000 = $750.
2. What is Freddie Mac's automated underwriting system called?
A. Desktop Originator
B. Underwriter Assistant
C. Loan Product Advisor
D. AUS: C. Loan Product Advisor
Freddie Mac's automated underwriting system is called Loan Product Advisor (formerly known as Loan Prospector),
while Fannie Mae's is called Desktop Underwriter.
3. Which of the following contains only items which should be used in calculat-
ing a borrower's debt-to-income ratio?
A. Monthly rent expense on current home, credit card payment, car insurance
B. Car payment, boat payment, child support obligations
C. Property tax payment, utility payment, cable bill
D. Mortgage insurance payment, average grocery costs, electric bill: B. Car payment,
boat payment, child support obligations
A debt-to-income ratio compares an applicant's total monthly debt to his or her total monthly income. Total monthly
debt would include simultaneous loans, debt obligations, alimony, and child support. Typical living expenses (e.g.,
utilities, health and disability insurance, food, phone or cable bills, etc.) are not included when calculating DTI.
, National and UST Mortgage Practice Exam 1
Study online at https://quizlet.com/_i3o4rv
4. Which of the following would NOT be required if a mortgage company wishes
to utilize electronic signatures on required disclosures?
A. Borrowers must be given the option to receive the disclosures in paper form
B. Borrowers must be able to withdraw their consent to receive the disclosures
electronically
C. The company must record the IP address from which the documents were
accessed
D. The company must disclose hardware and software requirements to borrow-
ers: C. The company must record the IP address from which the documents were accessed
Under the Electronic Signatures in Global and National Commerce Act (the E-SIGN Act), before obtaining a consumer's
consent, a financial institution must provide a clear and conspicuous statement to consumers, informing them of their
right or option to have the record provided or made available on paper or in a non-electronic form. The statement
must also explain the consumer's right to withdraw consent, including applicable conditions, consequences, and fees.
Consumers must also be provided with information about the hardware and software required to allow them to access
and retain the electronic records.
5. Under the S.A.F.E. Act, a licensed loan originator's responsibilities with regard
to recordkeeping include all of the following, except:
A. Not knowingly withholding, removing, or destroying any books or records
B. Making all of the licensee's records available to borrowers upon demand
C. Permitting interviews of principals, loan originators, and independent con-
tractors by state regulators
D. Making records and books available to the state regulator: B. Making all of the
licensee's records available to borrowers upon demand
Licensed loan originators and those required to be licensed must make records and books available to their state
regulator and permit interviews of officers, principals, employees, independent contractors, agents and customers. They
may not knowingly withhold, abstract, remove, mutilate, destroy, or secrete any books, records, or other information
during an investigation or examination. Loan originators are not required to make all of their records available to
borrowers upon demand.
, National and UST Mortgage Practice Exam 1
Study online at https://quizlet.com/_i3o4rv
6. Which of the following federal regulations prohibits discrimination based on
race, color, religion, sex, marital status, or national origin in a credit transac-
tion?
A. Regulation C
B. Regulation B
C. Regulation Z
D. Regulation G: B. Regulation B
Regulation B implements the provisions of the Equal Credit Opportunity Act (ECOA), which ensures that all persons,
consumers, and businesses are given an equal chance to obtain credit by prohibiting discrimination based on criteria
including race, color, religion, national origin, sex, marital status, and age (provided the individual is of age to enter
into a contract).
7. According to the standard deed of trust, how soon must a borrower on an
owner-occupied loan occupy the property?
A. Within 30 days of closing
B. Within 90 days of closing
C. Within 60 days of closing
D. Within 15 days of closing: C. Within 60 days of closing
Under most deed of trust, including most FHA and VA loans, a borrower who intends to occupy the property as his/her
residence must move in within 60 days after closing.
8. Which of the following would convey a property?
A. Deed rider
B. Warranty deed
C. Note
D. Deed of trust: B. Warranty deed
A warranty deed conveys full ownership of land, and is commonly used in purchase and sales transactions of real estate.
In addition to conveying property ownership, a warranty deed contains the promise of clear title, meaning the property
is free of encumbrances.
Study online at https://quizlet.com/_i3o4rv
1. A borrower received $1,000 per month in rental income. How much of the
income may be used to qualify the borrower for a loan?
A. $1,000
B. $800
C. $750
D. $1,250: C. $750
Generally, 75% of rental income may be used to qualify a borrower for a loan. This formula is based on an industry
standard that taxes, insurance, and maintenance costs will equal about 25% of the income that a property generates.
In this case, 75% x $1,000 = $750.
2. What is Freddie Mac's automated underwriting system called?
A. Desktop Originator
B. Underwriter Assistant
C. Loan Product Advisor
D. AUS: C. Loan Product Advisor
Freddie Mac's automated underwriting system is called Loan Product Advisor (formerly known as Loan Prospector),
while Fannie Mae's is called Desktop Underwriter.
3. Which of the following contains only items which should be used in calculat-
ing a borrower's debt-to-income ratio?
A. Monthly rent expense on current home, credit card payment, car insurance
B. Car payment, boat payment, child support obligations
C. Property tax payment, utility payment, cable bill
D. Mortgage insurance payment, average grocery costs, electric bill: B. Car payment,
boat payment, child support obligations
A debt-to-income ratio compares an applicant's total monthly debt to his or her total monthly income. Total monthly
debt would include simultaneous loans, debt obligations, alimony, and child support. Typical living expenses (e.g.,
utilities, health and disability insurance, food, phone or cable bills, etc.) are not included when calculating DTI.
, National and UST Mortgage Practice Exam 1
Study online at https://quizlet.com/_i3o4rv
4. Which of the following would NOT be required if a mortgage company wishes
to utilize electronic signatures on required disclosures?
A. Borrowers must be given the option to receive the disclosures in paper form
B. Borrowers must be able to withdraw their consent to receive the disclosures
electronically
C. The company must record the IP address from which the documents were
accessed
D. The company must disclose hardware and software requirements to borrow-
ers: C. The company must record the IP address from which the documents were accessed
Under the Electronic Signatures in Global and National Commerce Act (the E-SIGN Act), before obtaining a consumer's
consent, a financial institution must provide a clear and conspicuous statement to consumers, informing them of their
right or option to have the record provided or made available on paper or in a non-electronic form. The statement
must also explain the consumer's right to withdraw consent, including applicable conditions, consequences, and fees.
Consumers must also be provided with information about the hardware and software required to allow them to access
and retain the electronic records.
5. Under the S.A.F.E. Act, a licensed loan originator's responsibilities with regard
to recordkeeping include all of the following, except:
A. Not knowingly withholding, removing, or destroying any books or records
B. Making all of the licensee's records available to borrowers upon demand
C. Permitting interviews of principals, loan originators, and independent con-
tractors by state regulators
D. Making records and books available to the state regulator: B. Making all of the
licensee's records available to borrowers upon demand
Licensed loan originators and those required to be licensed must make records and books available to their state
regulator and permit interviews of officers, principals, employees, independent contractors, agents and customers. They
may not knowingly withhold, abstract, remove, mutilate, destroy, or secrete any books, records, or other information
during an investigation or examination. Loan originators are not required to make all of their records available to
borrowers upon demand.
, National and UST Mortgage Practice Exam 1
Study online at https://quizlet.com/_i3o4rv
6. Which of the following federal regulations prohibits discrimination based on
race, color, religion, sex, marital status, or national origin in a credit transac-
tion?
A. Regulation C
B. Regulation B
C. Regulation Z
D. Regulation G: B. Regulation B
Regulation B implements the provisions of the Equal Credit Opportunity Act (ECOA), which ensures that all persons,
consumers, and businesses are given an equal chance to obtain credit by prohibiting discrimination based on criteria
including race, color, religion, national origin, sex, marital status, and age (provided the individual is of age to enter
into a contract).
7. According to the standard deed of trust, how soon must a borrower on an
owner-occupied loan occupy the property?
A. Within 30 days of closing
B. Within 90 days of closing
C. Within 60 days of closing
D. Within 15 days of closing: C. Within 60 days of closing
Under most deed of trust, including most FHA and VA loans, a borrower who intends to occupy the property as his/her
residence must move in within 60 days after closing.
8. Which of the following would convey a property?
A. Deed rider
B. Warranty deed
C. Note
D. Deed of trust: B. Warranty deed
A warranty deed conveys full ownership of land, and is commonly used in purchase and sales transactions of real estate.
In addition to conveying property ownership, a warranty deed contains the promise of clear title, meaning the property
is free of encumbrances.
