National and UST Mortgage Practice
Exam 1 Questions and Answers Graded
A+
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 - Correct answer-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.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,What is Freddie Mac's automated underwriting system called?
A. Desktop Originator
B. Underwriter Assistant
C. Loan Product Advisor
D. AUS - Correct answer-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.
Which of the following contains only items which should be used in calculating 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
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
,D. Mortgage insurance payment, average grocery costs, electric bill - Correct
answer-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.
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
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
, D. The company must disclose hardware and software requirements to borrowers -
Correct answer-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.
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
©COPYRIGHT 2025, ALL RIGHTS RESERVED 4
Exam 1 Questions and Answers Graded
A+
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 - Correct answer-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.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,What is Freddie Mac's automated underwriting system called?
A. Desktop Originator
B. Underwriter Assistant
C. Loan Product Advisor
D. AUS - Correct answer-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.
Which of the following contains only items which should be used in calculating 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
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
,D. Mortgage insurance payment, average grocery costs, electric bill - Correct
answer-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.
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
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
, D. The company must disclose hardware and software requirements to borrowers -
Correct answer-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.
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
©COPYRIGHT 2025, ALL RIGHTS RESERVED 4
