National Exam Practice Test

  1. In which of the following instances would a borrower be required to obtain flood insurance?

    B. the appraiser indicates the property is located in a flood zone
  2. Your borrower does not wish to complete the demographics questions in the Government Monitoring section of the 1003. What should you do?

    A. complete the section based on a visual observation of the borrower
  3. Which of the following pieces of personal information is a borrower asked to provide voluntarily on the loan application?

    C. race and sex
  4. Front-end DTI is concerned with:

    C. a borrower's ability to meet housing expenses based on income
  5. Which of the following would not be found on a credit report?

    D. payments made to creditors who do not send data to a repository
  6. How is the mortgage insurance premium on an FHA loan determined?

    A. it is based on loan-to-value
  7. Which of the following would not be included on the loan application?

    B. closing costs
  8. Appraisers most commonly use which of the following appraisal methods when determining value for conforming loans?

    A. sales comparison approach
  9. Which of the following real estate appraisal approaches considers the replacement value of the property?

    A. cost approach
  10. Which of the following best describes the LTV ratio?

    D. it is the ratio of the borrower's principle loan balance to the appraised value of the property
  11. A borrower's back ratio includes which of the following?

    C. the total amount of debt carried by the consumer
  12. Why would you analyze a borrower's capacity?

    D. To determine if the borrower is financially capable of repaying the loan
  13. Your processor indicates that a 1003 cannot be submitted until the Government Monitoring section is completed. Choose
    one category of information that would be provided in this section of the 1003:

    D. Race, gender, ethnicity of the borrower
  14. A couple has qualified for a $245,600 loan. They are told that the broker fee will cost two points. What is the dollar
    amount of the broker fee?

    B. $4,912
  15. A borrower asks you for a definition of "a point." What would you tell him/her?

    A. it is 1% of the loan amount
  16. Why would a borrower pay discount points in conjunction with his/her loan transaction?

    C. they would change the note rate
  17. Which of the following provisions is available to a borrower when the subject property is located in a flood zone and
    flood insurance is required?

    A. FEMA's National Flood Insurance Program
  18. What factor do lenders analyze in order to determine if a borrower will be financially able meet the demands of loan

    C. size of the borrower's existing debt burden
  19. How does FHA determine the amount of upfront mortgage insurance a borrower will pay?

    D. by loan-to-value
  20. Appraisals which use the sales comparison approach include which of the following?

    D. comparison of value for three similar, recently sold properties
  21. The cost approach to appraisal includes which of the following?

    B. the value of the lot plus the replacement cost of the improvements
  22. Under what circumstances may a mortgage professional request information concerning an applicant's former spouse?

    A. when the applicant is including child support from the former spouse as income
  23. In order to meet fair lending requirements, a credit scoring system must be based on which of the following tests?

    D. validity test
  24. Why would a borrower agree to pay private mortgage insurance?

    A. in order to make a lower down payment on a property
  25. A borrower is using commission income in order to qualify for a loan. According to conforming underwriting
    guidelines, how long must the income have been received in order to qualify?

    D. at least 12 months as reported on the borrower's tax returns
  26. Which of the following forms are used to authorize underwriting access to borrower tax documents?

    A. form 4506-T
  27. Lisa Lincoln is salesperson who is paid 100% commission. What type of documentation would you ask her to
    provide as proof of her income for loan qualification?

    a. W-2s for the past two years and a copy of her last pay stub
    b. Tax returns for the past two years and an affirmation from her employer that the income is likely to
    c. Her tax return from last year
    d. A detailed verification form from her employer
    b. tax returns for the past two years and an affirmation from her employer that the income is likely to continue
  28. According to the Red Flag Rules, which of the following is a red flag?

    D. the applicant's credit report shows credit accounts opened before he/she was of legal age to obtain credit
  29. Sam Miller has an investment property for which he receives rent in the amount of $1,200 per month. He
    wishes to use the rental income as qualifying income. What amount may be used?

    D. $900
  30. What percentage of rental income may be included by a borrower who has investment properties for the
    purpose of income qualification?

    A. 75%
  31. If a borrower switches from a fixed rate loan to an adjustable rate loan, which of the following must occur?

    C. send a new GFE, TIL disclosure and any relevant broker disclosures
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National Exam Practice Test
National Mortgage Exam Practice Test