RMLO SAFE - CHAMPION QUESTIONS AND
ANSWERS A+ GRADED. Buy Quality Materials!
Conventional Loan
any mortgage that is not guaranteed or insured by the federal government. Any loan
that is not FHA, VA, RHS
LLPAs
Loan Level Price Adjustments: Additional fees assessed to conventional mortgages on
certain borrower and loan rick characteristics
UFMIP
Up-Front Mortgage Insurance Premium; a one-time charge by the FHA for insuring a
loan.
Base Loan Amount x 1.75% = UFMIP
Minimum credit score for FHA LTV 96.3%:
at or above 580
Minimum credit score for FHA LTV 90%
500 - 579
Ineligible credit score for FHA:
less than 500
FHA interested 3rd party contributions
6% of the lesser of the property's sales price or appraised value
FHA 203(b) program
fixed rate program used to purchase or refi 1-4 family dwellings
FHA 251
FHA ARM program
1, 3, 5, 7, & 10 year versions
FHA 234(c)
for loans on condominiums
COE
Certificate of Eligibility: Issued by Veteran's Administration to qualified veterans that
entitles them to VA guaranteed loans
DD-214
VA Separation Papers
1880
Request for COE
Two methods to qualify for VA
- residual income method
- DTI Ratio
VA DTI
41%
Exempt from VA funding fee:
- service-connected disability
- surviving spouse of veteran who died in service
Subprime Borrower Characteristics
, - 2 or more 30 day delinquencies within the prior 12 months
- one or more 60 day delinquencies within the prior 24 months
- foreclosure, repossession or charge off within the prior 24 months
- bankruptcy within the previous 5 years
- credit scores with high risk default
- DTI ratio of 50% or higher
Index
an instrument for measuring changes in interest rates. The lender's barometer of
change in interest rates/
Most common indexes:
- CMT
- COFI
- LIBOR
Margin
Percent added to the index in order to calculate the payment interest rate
The profit the lender will make above the index
The Guidance on Nontraditional Mortgage Product Risks defines nontraditional
mortgages as:
Loan products which allow borrowers to exchange lower initial loan payments for higher
payments once the loan has been amortized
Conforming Loan max IPC for LTV greater than 90%
3%
Conforming loan max IPC for LTV 75%-90%
6%
Conforming loan max IPC for LTV 75% or less
9%
Conforming loan investment property max IPC
2%
Loans that require counseling:
- HOEPA
- HECM
- FNMA Home Ready Purchase Mortgages
- FHLMC Home Possible Mortgage Loans
3 C's of Mortgage Underwriting
- Credit Reputation
- Capacity
- Collateral
Front Ratio
Monthly Housing Expense: % of buyers income to be applied to the mortgage payment
PITIA
- P&I
- Real Estate Taxes
- Insurance
- HOA Dues
- Subordinate financing payments on mortgages secured by real property
Monthly Housing Expense Ratio
ANSWERS A+ GRADED. Buy Quality Materials!
Conventional Loan
any mortgage that is not guaranteed or insured by the federal government. Any loan
that is not FHA, VA, RHS
LLPAs
Loan Level Price Adjustments: Additional fees assessed to conventional mortgages on
certain borrower and loan rick characteristics
UFMIP
Up-Front Mortgage Insurance Premium; a one-time charge by the FHA for insuring a
loan.
Base Loan Amount x 1.75% = UFMIP
Minimum credit score for FHA LTV 96.3%:
at or above 580
Minimum credit score for FHA LTV 90%
500 - 579
Ineligible credit score for FHA:
less than 500
FHA interested 3rd party contributions
6% of the lesser of the property's sales price or appraised value
FHA 203(b) program
fixed rate program used to purchase or refi 1-4 family dwellings
FHA 251
FHA ARM program
1, 3, 5, 7, & 10 year versions
FHA 234(c)
for loans on condominiums
COE
Certificate of Eligibility: Issued by Veteran's Administration to qualified veterans that
entitles them to VA guaranteed loans
DD-214
VA Separation Papers
1880
Request for COE
Two methods to qualify for VA
- residual income method
- DTI Ratio
VA DTI
41%
Exempt from VA funding fee:
- service-connected disability
- surviving spouse of veteran who died in service
Subprime Borrower Characteristics
, - 2 or more 30 day delinquencies within the prior 12 months
- one or more 60 day delinquencies within the prior 24 months
- foreclosure, repossession or charge off within the prior 24 months
- bankruptcy within the previous 5 years
- credit scores with high risk default
- DTI ratio of 50% or higher
Index
an instrument for measuring changes in interest rates. The lender's barometer of
change in interest rates/
Most common indexes:
- CMT
- COFI
- LIBOR
Margin
Percent added to the index in order to calculate the payment interest rate
The profit the lender will make above the index
The Guidance on Nontraditional Mortgage Product Risks defines nontraditional
mortgages as:
Loan products which allow borrowers to exchange lower initial loan payments for higher
payments once the loan has been amortized
Conforming Loan max IPC for LTV greater than 90%
3%
Conforming loan max IPC for LTV 75%-90%
6%
Conforming loan max IPC for LTV 75% or less
9%
Conforming loan investment property max IPC
2%
Loans that require counseling:
- HOEPA
- HECM
- FNMA Home Ready Purchase Mortgages
- FHLMC Home Possible Mortgage Loans
3 C's of Mortgage Underwriting
- Credit Reputation
- Capacity
- Collateral
Front Ratio
Monthly Housing Expense: % of buyers income to be applied to the mortgage payment
PITIA
- P&I
- Real Estate Taxes
- Insurance
- HOA Dues
- Subordinate financing payments on mortgages secured by real property
Monthly Housing Expense Ratio
