Chapter 12: Mortgage Brokerage
Mortgage Broker - correct answer ✔✔An individual who acts as an intermediary between lenders and
borrowers for a fee.
Fee Agreement - correct answer ✔✔A compensation agreement that a borrower will enter into with a
mortgage broker.
Preapplication - correct answer ✔✔The process of preapproval of the borrower.
Mortgage Bankers - correct answer ✔✔Companies that are licensed to make real estate loans that are
sold to investors.
Mortgage Commitment - correct answer ✔✔The process in which a lender issues a loan commitment
letter to the borrower to demonstrate willingness to fund the loan.
Nonconforming Loans - correct answer ✔✔Any loan that does not conform to or meet the requirements
for purchase on the secondary market by either Fannie Mae or Freddie Mac.
Pre approval Loan - correct answer ✔✔A pending loan in which all of the underlying documents are in
file and there is a strong probability that there are no credit or income issues stopping the loan from
closing.
Prequalification - correct answer ✔✔Refers to a pending loan in which a mortgage broker believes that,
based on a preliminary interview and a credit report, the borrower will probably (subject to verification)
be able to meet the loan requirements of a lender - assuming the borrower is telling the truth about his
or her financial situation and income status.
Underwriting - correct answer ✔✔The process by which a lender evaluates a prospective borrower's
application through verification of employment and financial information and analysis of credit and
appraisal reports.
Mortgage Broker - correct answer ✔✔An individual who acts as an intermediary between lenders and
borrowers for a fee.
Fee Agreement - correct answer ✔✔A compensation agreement that a borrower will enter into with a
mortgage broker.
Preapplication - correct answer ✔✔The process of preapproval of the borrower.
Mortgage Bankers - correct answer ✔✔Companies that are licensed to make real estate loans that are
sold to investors.
Mortgage Commitment - correct answer ✔✔The process in which a lender issues a loan commitment
letter to the borrower to demonstrate willingness to fund the loan.
Nonconforming Loans - correct answer ✔✔Any loan that does not conform to or meet the requirements
for purchase on the secondary market by either Fannie Mae or Freddie Mac.
Pre approval Loan - correct answer ✔✔A pending loan in which all of the underlying documents are in
file and there is a strong probability that there are no credit or income issues stopping the loan from
closing.
Prequalification - correct answer ✔✔Refers to a pending loan in which a mortgage broker believes that,
based on a preliminary interview and a credit report, the borrower will probably (subject to verification)
be able to meet the loan requirements of a lender - assuming the borrower is telling the truth about his
or her financial situation and income status.
Underwriting - correct answer ✔✔The process by which a lender evaluates a prospective borrower's
application through verification of employment and financial information and analysis of credit and
appraisal reports.
