Deck 9: Borrower Qualification

Question 1

One of the better criteria used to determine an applicant's stability of income is

A) the amount of income in excess of that needed for approval
B) the record of payment to other creditors
C) the length of time on the job
D) whether or not more than one applicant is liable

Answer 1

the length of time on the job

Question 2

The Act that prohibits certain types of discrimination in the granting of credit is the:

A) Fair Credit Reporting Act
B) Equal Credit Opportunity Act
C) Real Estate Settlements Procedures Ace
D) Fair Housing Act

Answer 2

Equal Credit Opportunity Act

Question 3

The VA residual qualification method determines an applicant's residual income, then measures that against the applicant's

A) mortgage payment amount
B) other shelter expenses
C) other monthly obligations
D) VA calculated cost of living expense

Answer 3

VA calculated cost of living expense

Question 4

The assistance given by a credit report to borrower qualification is primarily to:

A) verify the applicant's place of residence
B) show the applicant's payment record to other creditors
C) confirm employment and banking relations
D) disclose any liens against applicant's property

Question 5

Which of the following conditions would allow a lender to ask questions about income received from child support?

A) The lender suspects that all income has not been properly reported
B) The children eligible for the support will be living in the home to be acquired
C) The property to be acquired is located in a community property state
D) The child support income is offered as a part of the money that will be used to repay the loan

Question 6

The private mortgage insurance carrier and the amount of insurance coverage required are determined by the:

A) Mortgagor
B) Seller
C) Mortgagee
D) Real Estate Agent

Question 7

An application for a commercial loan would include all the following items EXCEPT:

A) information on the applicant company and the individuals involved
B) complete Financial statements and property evaluation
C) a statement of compliance with RESPA requirements
D) projection of income to show source of loan repayment

Question 8

The percentage ratios used as guidelines in the qualification of an applicant's income by HUD/FHA are based on the applicant's

A) effective income not reduced by taxes
B) net effective income after deduction of both income and social security taxes
C) net effective income reduced only by withholding tax
D) net effective income reduced only by social security taxes

Question 9

The Home Affordable Modification Program main provision is that the modified mortgage payment will not exceed _______ percent of their verified monthly gross (pre-tax) income.

A) 29
B) 31
C) 36
D) 41

Question 10

The Federal Credit Reporting Acts primary provisions are to:

A) make available to the mortgagor procedures for disputing accurate information on their credit report.
B) create a rule that all credit report users provide a copy of the credit reports to the borrower.
C) provide satisfactory procedures to ensure the confidentiality and accuracy of consumer credit information.
D) allow practical procedures to deny credit to credit-worthy borrowers.

Question 11

The source of repayment of a home loan is expected to come from:

A) income derived from the property itself
B) additional borrowing
C) the personal income of the borrower
D) other rental income

Question 12

Which of the following best describes the purpose of a loan agreement as part of a corporate business loan?

A) It details the terms of loan repayment
B) Lender approval is needed for the company to undertake an expenditure that might jeopardized loan repayment
C) To limit all corporate expenditures during term of the loan
D) To provide additional collateral to secure the loan