MCTI BASIC LOAN ORIGINATION MULTIPLE CHOICE QUESTIONNAIRE

1. In New York State, the mortgagor is the Please select one ---------------------------- a) customer b) client c) representative d) all of the above of the loan originator.

2. In New York State a loan officer may: Please select one ---------------------------- a) work for a banker and broker b) collect commissions c) work for a broker or banker d) underwrite mortgage loans

3. In New York State a mortgage broker is: Please select one ---------------------------- a) bonded and licensed b) tax exempt c) bonded and registered d) all of the above

4. The mortgage process step which closely follows loan origination is: Please select one ---------------------------- a) underwriting b) legal review and closing c) processing d) commitment

5. A loan file in underwriting suspense will remain inactive until: Please select one ---------------------------- a) loan stipulations are cleared b) the commitment is signed c) an autopsy has been performed d) the loan is locked

6. Issues of title are dealt with in: Please select one ---------------------------- a) processing b) legal review c) underwriting d) post mortem operations

7. A borrower will generally: Please select one ---------------------------- a) be represented by their own attorney b) pay the bank attorney’s fee c) not be responsible for a realtor fee d) all of the above

8. A purchase transaction is: Please select one ---------------------------- a) subject to a 3 day right of rescission b) finalized the same day c) funded within 48 hours d) table funded by brokers in NY state

9. The note: Please select one ---------------------------- a) obligates the borrower b) pledges real estate c) creates a lien d) both b and c above

10. The mortgagee: Please select one ---------------------------- a) accepts and holds a mortgage b) pledges property c) legalizes purchases d) funds unsecured loans

11. The duties of the borrower are: Please select one ---------------------------- a) pay real estate taxes b) pay hazard insurance c) maintain property in good repair d) all of the above

12. If a borrower is unable to cure a default: Please select one ---------------------------- a) he may have his mortgage foreclosed b) he may have to sell his property c) both a and b above d) he may exercise his right under the

13. New York is: Please select one ---------------------------- a) a lien theory state b) a commonwealth c) an oxymoron commonwealth d) a judicial enclave

14. A borrower may attempt to stop a foreclosure by: Please select one ---------------------------- a) selling his home b) trial c) claiming bankruptcy d) both a and c above

15. The type of foreclosure procedure followed in New York State is: Please select one ---------------------------- a) no recombinant b) judicial c) strict d) all of the above.

16. A mortgage banker must have: Please select one ---------------------------- a) warehousing lines b) a broker registration c) a license d) both a and c above

17. A deed in lieu of foreclosure is sometimes known as: Please select one ---------------------------- a) a deficiency judgment b) A friendly foreclosure c) chattel d) non-negotiable

18. The mortgage servicing company: Please select one ---------------------------- a) collects payments b) issues statements c) both a and b above d) table funds the loans

19. To sell servicing retained: Please select one ---------------------------- a) I must be a broker b) I must be an attorney c) I must be a licensed real estate agent d) I must be a banker.

20. In order to be recorded a mortgage must: Please select one ---------------------------- a) be acknowledged b) prove due process c) less than one year old d) all of the above

21. Public records offer: Please select one ---------------------------- a) actual notice b) constructive notice c) advice d) all of the above

22. The term alienation refers to: Please select one ---------------------------- a) transfer of title b) receiving a gift c) tax exempt status d) fraud exposure

23. A piggyback is an example of: Please select one ---------------------------- a) two purchase money mortgages b) a primary and subordinate lien c) mortgages closed concurrently d) all of the above

24. At a purchase the borrower is: Please select one ---------------------------- a) expected to make adjustments to the seller b) expected to default c) prepared to pay closing costs d) usually a and c above

25. A factor in determining required down payment is: Please select one ---------------------------- a) a borrower’s credit score b) money available c) lenders criteria d) all of the above

26. To file a lien not in a primary position a lender must retain: Please select one ---------------------------- a) concert clause b) a subordination agreement c) an escrow d) postulus emptor

27. The ltv represents the ratio of: Please select one ---------------------------- a) down payment to purchase price b) loan to purchase price prior to concessions c) loan to appraised value d) both b and c above

28. A refinance is: Please select one ---------------------------- a) a brand new second mortgage b) a junior lien c) a brand new first mortgage d) always one year seasoned

29. When refinancing, it is generally assumed: Please select one ---------------------------- a) a first lien is being paid off b) closing costs are included c) a home equity is being paid off d) both a and b

30. Second mortgages are more popular when: Please select one ---------------------------- a) if a person already has a first b) interest rates have been rising c) interest rates have been declining d) both a and c above

31. A balloon mortgage is generally offered: Please select one ---------------------------- a) for a fixed rate second mortgage b) for affordability c) for commercial products d) all of the above

32. In order to remove a co-borrower, the remaining borrower must: Please select one ---------------------------- a) get a home equity loan b) seek legal council c) consolidate and modify d) refinance

33. A person may choose a piggyback to: Please select one ---------------------------- a) provide rested assurance b) avoid private mortgage insurance c) enjoy the conforming loan limit d) both b and c above

34. A borrower may achieve equity by: Please select one ---------------------------- a) consolidation and modification b) refinancing c) staying below the conforming limit d) appreciation

35. The lowest payment would be enjoyed in: Please select one ---------------------------- a) a 40 year fixed b) a 15/30 balloon c) a 15 year fixed d) a 30 year fixed

36. Mortgage interest is: Please select one ---------------------------- a) tax deductible b) reported to the IRS c) paid in arrears d) all of the above

37. A thrift is a: Please select one ---------------------------- a) zero coupon bond b) full service financial institution c) commercial bank d) confidence scheme

38. Mortgage bankers are considered: Please select one ---------------------------- a) middlemen b) intermediaries c) officers of the court d) direct lenders

39. Mortgage brokers: Please select one ---------------------------- a) bring buyers and lenders together b) fund loans c) charge points d) all of the above

40. To be a banker in New York State: Please select one ---------------------------- a) you must have two years experience b) you must be licensed c) you must have an MBA in Finance d) both a and b above

41. A credit union: Please select one ---------------------------- a) operates unilaterally b) is exclusive c) a mortgage banker d) a fiduciary enclave

42. Private mortgage insurance: Please select one ---------------------------- a) is required on conventional loans b) is required on FHA loans c) is everlasting and complete d) non-indemnifying

43. The listing real estate agent: Please select one ---------------------------- a) is the agent of the borrower b) is the agent of the seller c) is a dual agent d) is not allowed to do the mortgage

44. A homeowner may stop paying PMI: Please select one ---------------------------- a) when he can prove he has 20% equity b) when he can prove he has 25% equity c) when he has a year of timely payments d) both a and c above

45. The FHA is: Please select one ---------------------------- a) a statewide program b) an arm within HUD c) only for first time homebuyers d) hard to qualify for

46. The Department of Veterans Affairs offers: Please select one ---------------------------- a) mortgages for eligible veterans b) mortgage coupons c) mortgage guarantees for eligible veterans d) both b and c

47. The term assumable mortgage refers to a mortgage where: Please select one ---------------------------- a) the payments can be taken over b) the payments are increased rather than reduced c) the seller is continuously liable d) both a and c above

48. An FHA 203b mortgage would be excellent for: Please select one ---------------------------- a) a borrower with a bankruptcy one year discharged b) a borrower with grant money as a down payment c) purchasing a house with a violation d) purchasing a handyman special

49. A 203k is excellent for: Please select one ---------------------------- a) renovations b) a home with $2,000 in repairs c) a land loan d) all of the above

50. The conforming loan limit: Please select one ---------------------------- a) varies by state b) is throughout the US c) can change monthly d) determines variance

51. Fannie Mae is: Please select one ---------------------------- a) the first lady of lending b) a purchaser of loans c) a government agency d) a type of credit scoring

52. A benefit of automated underwriting is: Please select one ---------------------------- a) it doesn’t discriminate b) it is quick c) both a and b above d) it gives the buyer a better rate

53. A FNMA Expanded Level approval: Please select one ---------------------------- a) may have a high PMI cost b) may be no income verification c) may deal with a JUMBO loan d) is available only for seniors

54. A reverse mortgage deals with lending to: Please select one ---------------------------- a) immigrants b) senior citizens c) first time homebuyers d) welfare recipients

55. The AUS System offered by Freddie Mac is called the: Please select one ---------------------------- a) Desktop Underwriter b) The Loan Prospector c) Expedia Table d) Both a and b above

56. All are examples of a non-conforming loan except: Please select one ---------------------------- a) B through D credit b) A- credit c) a jumbo loan d) 100% financing

57. RESPA requires a good faith be issued within: Please select one ---------------------------- a) three days of application b) just prior to settlement c) before the application d) within ten days of application

58. ECOA is about: Please select one ---------------------------- a) discouraging kickbacks b) truth in advertising c) equal opportunity d) unity in lending

59. The Department of Housing and Urban Development: Please select one ---------------------------- a) enforces RESPA b) is part of the secondary market c) calculates the APR d) is part of the Senate

60. Regulation Z: Please select one ---------------------------- a) is concerned with discrimination b) wants truth in advertising c) requires fingerprinting d) is a mandatory undertaking

61. Prepaid items are part of: Please select one ---------------------------- a) the settlement charges b) a buyers broker expense c) only refinances d) a section 32 calculation

62. Economic obsolescence refers to: Please select one ---------------------------- a) a problem on title b) a problem on appraisal c) the Federal Reserve d) a high cost loan

63. The A.P.R. is: Please select one ---------------------------- a) a disclosure figure b) the rate we use to calculate payment c) the rate which exceeds the conforming loan limit d) the rate we use to calculate points

64. A closing fee which would not differ from lender to lender would be: Please select one ---------------------------- a) the recording fee b) the mortgage tax c) both a and b above d) the administration fee

65. A title policy insures against: Please select one ---------------------------- a) floods b) unknown defects c) charges of ill repute d) international documents

66. A flood insurance certificate is required: Please select one ---------------------------- a) on all conforming loans b) on all loans federally related c) on all loans in a flood zone d) only if the lender requests it

67. A borrower may save money on a refinance by utilizing: Please select one ---------------------------- a) a CEMA b) a re-issuance rate c) both a and b d) a lien reducer

68. Most HELOCs are tied to: Please select one ---------------------------- a) the prime rate b) the Washington prime c) the cost of savings index (COSI) d) both a and b

69. Negative amortization can occur in: Please select one ---------------------------- a) fixed rate loans b) balloon loans c) adjustable rate loans d) loans with a prepayment penalty

70. LIBOR is an example of: Please select one ---------------------------- a) an index b) a margin c) a type of mortgage d) a regulatory body

71. A borrower will be qualified on the first adjustment date for: Please select one ---------------------------- a) a one year adjustable b) all variable rate loans c) a 2/28 mortgage d) all Level II approvals

72. A mortgage broker must disclose any yield spread premium received: Please select one ---------------------------- a) true b) false c) only on upfront points d) only on owner-occupied loans

73. The borrower’s loan officer is also the selling agent on the loan: Please select one ---------------------------- a) the loan officer is a dual agent b) the loan officer is doing something illegal c) this will trigger a RESPA response d) notification must be made to DOS

74. Three eighths is written: Please select one ---------------------------- a) .375 b) .385 c) .38 d) 3.8

75. The term par pricing means the premium coming back will be: Please select one ---------------------------- a) subpar b) zero c) one d) one or above

Questions 76-80 are based on the following scenario: Joan wants to buy a two family home for $315,000 and she has roughly 10% to put down (leaving her nothing for closing) but the seller is willing to do a seller’s concession for the $8,000 in settlement charges. The lender will require a 10% down payment.

76. The purchase price on contract will be: Please select one ---------------------------- a) $315,000 b) $307,000 c) $323,000 d) $315,800

77. The net price to the seller will be: Please select one ---------------------------- a) $315,000 b) $307,000 c) $323,000 d) $315,800

78. The maximum allowable seller’s concession on this deal would be: Please select one ---------------------------- a) Five percent b) Six percent c) None d) Three percent

79. Joan’s mortgage amount would be: Please select one ---------------------------- a) $283,500 b) $307,000 c) $290,700 d) $275,500

80. The ltv on this loan would be: Please select one ---------------------------- a) 92% b) 100% c) 108% d) 90%

Questions 81 through 93 are based on the following scenario: Sandy and Ralph are purchasing a house for $435,000. They are getting a gift for closing costs and have a sub-prime approval for an 80/20. The first mortgage rate quoted was 6.5% fully amortized on a 3/27. The second was a choice of a HELOC at prime (currently 5.5%) or a 30/15 balloon at 11.25%. There is no PMI, taxes are $2400 and homeowners is $1200.

80. The required down payment is: Please select one ---------------------------- a.) none b.) 10% c.) 5% with a 3% seller’s concession d.) at least 1%

81. A disadvantage of the HELOC is: Please select one ---------------------------- a) reverse amortization b) negative amortization c) it can change every year d) it can change monthly

82. The CLTV for this loan is: Please select one ---------------------------- a) 80% b) 20% c) both a and b above d) 100%

83. The borrower will make: Please select one ---------------------------- a) one payment b) weekly payments c) two payments monthly d) none of the above

84. The borrower can refinance: Please select one ---------------------------- a) both mortgages together b) the first without the second c) the second without the first d) all of the above

85. The primary loan amount is: Please select one ---------------------------- a) $348,000 b) $425,000 c) $276,000 d) $ 69,000

86. The monthly escrow will be: Please select one ---------------------------- a) $500 b) $300 c) $200 d) $100

87. The PITI on the 80/20 HELOC scenario will be: Please select one ---------------------------- a) $2993.58 b) $2199.60 c) $ 493.98 d) $2898.35

88. The PITI on the 80/20 Fixed rate Balloon scenario will be: Please select one ---------------------------- a) $3044.60 b) $3015.23 c) $3315.23 d) $3344.60

89. In the 80/20 Fixed rate Balloon scenario, the borrower can expect: Please select one ---------------------------- a) his payment to change every year b) his payment to change in 2 years c) his payment to change in 3 years d) his payment to be fixed

90. The loan officer may have structured the loan this way: Please select one ---------------------------- a) to avoid an income check b) to avoid MMI c) to avoid PMI d) for lower closing costs

91. A closing cost which may be greater due to the piggyback is: Please select one ---------------------------- a) title insurance b) mortgage tax c) application fee d) recording fee

92. Assuming a qualifying ratio of 50% on the fixed rate scenario with no other debt, qualifiable income would be: Please select one ---------------------------- a) $5,000 monthly b) $80,500 yearly c) $6,200 monthly d) $62,000 yearly

93. Assuming a qualifying ratio of 55% on the 80/20n fixed rate balloon scenario with a car payment of $500, and a boat loan of $650 with 8 payments left, qualifiable income would be: Please select one ---------------------------- a) $7,000 monthly b) $8,500 monthly c) both a and b above d) $78,000 annually

94. To determine qualifiable income for a self-employed borrower we will examine: Please select one ---------------------------- e) a paystub f) a w-2 g) A 1099 h) A 1040

95. We use a PITI wash: Please select one ---------------------------- a) when credit is messy b) with multi-family dwellings c) for self-employed borrowers d) with child support

96. We can gross up: Please select one ---------------------------- a) self-employed income b) non-taxable income c) any pension income d) rental income

97. The 4506 Form is used to: Please select one ---------------------------- a) determine profit and loss b) capture earnings c) check declared income d) verify liabilities

98. A vacancy factor is applied to: Please select one ---------------------------- a) Rental income b) Self-employed income c) Boarding houses d) Non-declared income

99. Assets in a retirement fund to be Liquidated should be: Please select one ---------------------------- a) reduced 40% b) increased 25% c) reduced 30% d) stated at face value

100. A person who can verify employment yet earns cash will require: Please select one ---------------------------- a) a stated income loan b) a true no documentation loan c) a no income/no asset check d) a co-borrower with income

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