Question 1

An automated underwriting system is one that:&#10;A) automatically takes a loan application&#10;B) can only transmit loan information for automatic analysis by a human underwriter&#10;C) can analyze any loan without special software&#10;D) allows a computer with proper software to analyze a loan application and grant approval if justified

Accepted Answer

An automated underwriting system is a type of computer program that can analyze loan applications and grant approval if justified, without requiring a human underwriter to manually review the application. This is done using specific software and algorithms designed to analyze credit reports, financial statements, and other relevant data. Therefore, option D is the best choice.

Question 2

Mortgage loan origination software must increasingly be compatible with:&#10;A) Microsoft Excel&#10;B) TurboTax&#10;C) Third party originator web portals&#10;D) Mortgagebot

Accepted Answer

Third party originator web portals are becoming more prevalent and important for mortgage loan origination. The software must be able to integrate and communicate with these portals to allow for a seamless and efficient loan process. Microsoft Excel and TurboTax may be helpful tools for loan officers, but are not necessary for the software's compatibility. Mortgagebot is just one example of a specific software solution but is not necessarily needed for all mortgage loan origination software.

Question 3

An ownership interest of one percent or more between parties involved with a CLO operation is called a &#34;controlled business arrangement&#34; and must be:&#10;A) a required used of any affiliated company&#10;B) disclosed to any consumer&#10;C) prohibited to use an affiliated company&#10;D) at least a 25 percent discount given by an affiliated company

Accepted Answer

According to the Real Estate Settlement Procedures Act (RESPA), any ownership interest of one percent or more in a controlled business arrangement must be disclosed to consumers. This is to avoid any potential conflicts of interest and ensure transparency in the CLO operation.

Question 4

Which of the following is true about credit scoring?&#10;A) It is a new method of credit analysis&#10;B) It is a number compiled from credit records that show a person's creditworthiness&#10;C) It has no variation and can be the sole criteria for creditworthiness&#10;D) It is used only for analysis of car loans

Accepted Answer

Credit scoring is a method of evaluating an individual's creditworthiness based on their credit history. It is a compilation of various factors such as payment history, amount of debt, and length of credit history to create a numerical score. This score is then used by lenders to determine the likelihood of the individual making their required loan payments on time. Credit scoring has been used for many years, and it is a widely accepted method for determining creditworthiness.

Question 5

The best explanation of computerized loan origination is:&#10;A) a loan application can be analyzed by computer and approved if justified&#10;B) information on a loan application can be stored for future use&#10;C) loan information can be transmitted via computer to an underwriter for analysis&#10;D) the computer lists all information required for loan analysis

Accepted Answer

The answer of The best explanation of computerized loan origination...

Question 6

The advantage of a web site offering mortgage loans is:&#10;A) an individual can obtain a mortgage loan without paying for or dealing with an agent or loan officer&#10;B) the availability of loans is very limited&#10;C) the cost is generally higher than with regular channels&#10;D) it is a time consuming procedure as careful analysis is needed.

Accepted Answer

A web site offering mortgage loans allows individuals to apply for and obtain a mortgage loan without the need for a middleman such as an agent or loan officer. This can save time and money as there are no fees or commissions to be paid. Additionally, the application process can be completed online, making it more convenient for borrowers.

Question 7

Which of the following is NOT a loan classification with Freddie Mac's &#34;Loan Prospector&#34;?&#10;A) Rejected&#10;B) Accepted&#10;C) Refer&#10;D) Caution

Accepted Answer

"Rejected" is not a classification used by Freddie Mac's Loan Prospector. Loan Prospector classifications include "Accepted," "Refer," and "Caution," among others, to indicate the level of underwriting review the loan requires.

Question 8

Even though greatly diminished in market share subprime loans offer all of the following EXCEPT&#10;A) a higher profit margin if carefully made&#10;B) a market that has been shunned before high tech analysis allowed better selection for carefully documented loans&#10;C) greater depth of loan analysis has eliminated all risks&#10;D) an expansion of the loan market beyond higher quality &#34;A&#34; rated borrowers

Accepted Answer

Greater depth of loan analysis has not eliminated all risks associated with subprime loans. While there may be better selection for carefully documented loans, there is still a greater risk for default and default-related losses in the subprime market compared to the market for higher quality borrowers.

Question 9

Freddie Mac offers an &#34;expedited&#34; collateral assessment which means&#10;A) no appraisal is necessary&#10;B) must only assure that property exists&#10;C) a short appraisal at lender's option which may be completed within two hours&#10;D) it can only be used if property is in a recognized subdivision

Accepted Answer

A short appraisal at lender's option which may be completed within two hours

Question 10

Fannie Mae offers two automated underwriting programs, one called &#34; Desktop Originator&#34; that is for use:&#10;A) by an agent taking information on a laptop computer for transmittal to a seller/servicer who verifies and transmits the information to Fannie Mae&#10;B) to transmit information directly to Fannie Mae's Desktop Underwriter system&#10;C) prohibited to a real estate broker&#10;D) by any individual

Accepted Answer

Desktop Originator is designed for use by agents who collect information and then transmit it to a seller/servicer, who verifies and sends it to Fannie Mae.

Question 11

Which of the following is true of loans made on the Internet?&#10;A) They are always higher cost mortgage loans&#10;B) There is no opportunity for sham operators to take advantage of consumers&#10;C) A user must travel to find an Internet outlet&#10;D) A seeker of a loan can maintain limited anonymity while asking for information

Accepted Answer

The answer of Which of the following is true of...

Deck 14: Technology Advances in Mortgage Lending