Day 4

Question 1

8 Factors of ATR that must be verified:

Answer 1

1. Employment Status
2. Mortgage Payments for new loan
3. Payments on subordinate liens
4. Monthly taxes & Insurance
5. Income & Assets
6. Debts, alimony & child support
7. DTI ratio
8. Credit History

Question 2

4 requirements of Qualified Mortgage (AAA):

Answer 2

1. Must be fully amortizing (no I/O, neg amor, or balloons)
2. Must not exceed 30y term
3. Points and fees do not exceed 3% of LOAN amount
4. APR is
   -less/equal to 1.5% + APOR for CONFORMING/GOVERNMENT
   -less/equal to 2.5% + APOR for JUMBO loans
   -less/equal to 3.5% + APOR for SUBORDINATE loans
   (presumption of compliance)

Question 3

2 requirements of HPML (BBB):

Answer 3

1. 3% < Points and fees </= 5% (of loan amount)
2. APR > 1.5% + APOR for CONFORMING (gov must be QM)
   > 2.5% + APOR for JUMBO
   > 3.5% + APOR for SUBORDINATE
   (rebuttable presumption of compliance, close-end loans)

Question 4

2 requirements for High Cost (HOEPA/unrated):

Answer 4

1. Points and fees > 5% (of loan amount)
2. APR > 6.5% + APOR for 1st Lien
   > 8.5% + APOR for 2nd Lien
   (no presumption of compliance, close and open-end loans)

Question 5

What 2 sections of TILA relate to HPML/HOEPA?

Answer 5

1. Sec 35- HPML
2. Sec 32- HOEPA

Question 6

Who oversees GSEs and what do they do?

Answer 6

FHFA , determines loan limits

Question 7

5 requirements for CONFORMING loan:

Answer 7

1. <$647,200
2. 620 min credit score
3. LTV: 95% PURCHASE/R&T (5% down)
   80% CASH OUT
4. 3 types of OCCUPANCY
5. SELLER’S CONCESSIONS
   -3% sales price if <10% down
   -6% sales price if </=25% down
   -9% sales price if >25% down

Question 8

Ability to Repay

Answer 8

Reg by CFPB that lenders make good faith determination that borrower can repay loan

Question 9

Payment shock

Answer 9

Sudden increase in monthly payment than borrower can afford

Question 10

Qualified Mortgage

Answer 10

meets requirements under Dodd-Frank Wall Street Reform and Consumer Protection Act to be sold to Fannie/Freddie

Question 11

Safe Harbor

Answer 11

Protect lenders against lawsuits thanks to QMs

Question 12

Mortgage Market

Answer 12

marketplace where home loans and servicing rights are bought and sold between lenders and investors

Question 13

Service Release Premium

Answer 13

Payment received by lender when closed loan sold to secondary market

Question 14

Mortgage-Backed Security

Answer 14

Pool of asset-backed securities originated to AAA/BBB standards

Question 15

Securitization

Answer 15

Selection of debt that is to be pooled (residential mortgages)

Question 16

Servicer

Answer 16

Company to which the note and mortgage documents are sold or transferred from the originating company

Question 17

5 types of NON-CONFORMING loans:

Answer 17

1. Jumbo
2. 2nd Mortgages- HEIL, HELOC, Piggyback
3. Stated Income (no longer allowed under Dodd Frank)
4. Subprime loans (<580 credit)
5. Negative amort/Option ARMS

Question 18

3 NON-CONVENTIONAL loan programs:

Answer 18

1. FHA- HUD
2. VA- Dep of VA
3. USDA- Dep of Treasury

Question 19

Assumption Clause

Answer 19

Non Vets can take over VA loan

Question 20

8 requirements of GOV loans:

Answer 20

1. registered with CASE #
2. Require ESCROW
3. Only 1 GOV loan at a time
4. Must be PRIMARY RES
5. Eligible for ASSUMPTION CLAUSE
6. INSURED/GUARANTEED
7. NO 2nd financing
8. Down payment funds can only be gifted from non-profit or family

Question 21

How much is UFMIP for FHA?

Answer 21

1.75%

Question 22

Monthly MIP for FHA (3)

Answer 22

1. either .8% or .85%
2. > 90% LTV- MIP for life
3. <90% LTV- MIP for 11 years

Question 23

FHA Streamline (4)

Answer 23

refinance FHA loan with less documentation
1. Rate and Term only
2. Closing costs and escrow can’t be rolled into loan
3. Had prior FHA loan for 6+ months
4. portion of UFMIP refunded and credited towards new loan

Question 24

FHA DTI:
Min Down:
Min FICO:
Sellers Concessions:
Cashout LTV:

Answer 24

31/43
3.5% (10% if 500-579)
580
max 6%
80%

Question 25

Which loan doesn't require ATR?

Answer 25

HECM

Question 26

FHA: 6 HECM characteristics:

Answer 26

1. must pay UFMIP and MIP 2. 62+ years old 3. primary residence 4. negative amortization 5. HUD approved counseling 6. Loan due if owner dies

Question 27

FHA: 2-1 Buy Down

Answer 27

(we don't do these) Two initial temporary start interest rates that increase in stair -step fashion to permanent rate. 2 points>1 point>0 points

Question 28

VA: Max Entitlement Amount (3)

Answer 28

1. $36k (min) /= 25% of loan amount 2. Paid to lender in foreclosure 3. If loan exceeds county limit, put down 25% of excess

Question 29

VA: Funding Fee (4)

Answer 29

1. Can be rolled into loan 2. .5% to 3.6% 3. 2.3% for first time, no money down 4. Disabled vet or surviving spouse DOES NOT PAY

Question 30

VA: Streamline (5)

Answer 30

1. Interest Rate Reduction Refinance Loan 2. Rate and Term refi only 3. Can roll cost into loan 4. No COE 5. No Appraisal

Question 31

USDA characteristics (5)

Answer 31

1. Rural/residential only 2. 2% Guarantee fee can be rolled into loan 3. .3% Annual fee (paid monthly) 4. No limit on concessions 5. No down payment required

Question 32

Mortgage Loan Timeline (8)

Answer 32

1. Initial Call (what do they want?) 2. ALIENS 3. Initial Disclosures (LE, GFE, client gives Intent to Proceed) 4. Application (URLA 1003) 5. Processing and Underwriting 6. 3rd Party Verification (insurance, appraisal) 7. Closing (title company) 8. Servicing