Mortgage Origination

Alternative Text for Accessibility

Number 1. A short-form, simplified or otherwise unique documentation that differs from standard documentation. Such variation may be applied to accelerate a transaction process or to provide additional information and support to accommodate some unusual or non-standard risk exposure or concerns.

Correct Answer: Alternative Documentation

Number 2. A formal loan request that is submitted by a potential borrower providing key information that the lender can process in order to arrive at a determination of whether it is interested in, or likely willing to, provide a loan.

Correct Answer: Application

Number 3. A mass or high volume, automated system that processes mortgage applications using standardized forms and decision criteria to evaluate the acceptability of an application and to assess its relative risk.

Correct Answer: Automated Underwriting

Number 4. A formal document that indicates the various debits and credits for the buyer and seller, along with charges to lenders and other service providers involved in the transfer of ownership of some underlying property.

Correct Answer: Closing Statement

Number 5. The maximum allowable mortgage obligation that can be issued when compared to the gross income or earnings of the borrower.

Correct Answer: Debt-to-Income Ratio

Number 6. The policies, procedures and practices that establish the minimal --or standardized-- data requirements that must be compiled to support the underwriting and approval of a loan or mortgage.

Correct Answer: Documentation Requirements

Number 7. The outlays or expenses associated with homeownership or rental. In the case of homeownership, this can include such items as mortgage payments, property taxes and insurance.  In other cases, the term can be expanded to include such items as maintenance, security, utilities, and other costs associated with ownership or rental of housing units.

Correct Answer: Housing Expense

Number 8. The percent of gross income that can prudently be allocated to homeownership or rental without exceeding normal bounds and cannibalizing income or savings from other, necessary expenditures.  In general, the ratio is set at 28% for principal and interest and 33% including property taxes and insurance.

Correct Answer: Housing Expense Ratio

Number 9. The set of procedures that are undertaken by a potential lender in evaluating the acceptability of a loan application as well as helping assess its relative risk and pricing.

Correct Answer: Loan Underwriting

Number 10. The highest permitted ratio of a mortgage to a current market value.

Correct Answer: Maximum Loan-to-Value Ratio

Number 11. The aggregate stream of mortgages that are being sourced and are in various stages of processing ranging from the acceptance of individual mortgage applications to closings.

Correct Answer: Mortgage Pipeline

Number 12. An assemblage of individual mortgages into an aggregate holding that can be sold or securitized.

Correct Answer: Mortgage Pool

Number 13. The act of creating or causing an investment or mortgage to occur; the sourcing of a potential transaction that is ultimately consummated.

Correct Answer: Origination

Number 14. A charge that is made by a lender to recover the costs and expenses associated with underwriting and originating a mortgage.

Correct Answer: Origination Fee

Number 15. The party, entity or company that initiates a loan or mortgage and may help in underwriting and/or investment decision-making.

Correct Answer: Originator

Number 16. The act of providing a forward commitment from a lender to a borrower which remains in place until an expiration period or a borrower fails to meet qualification requirements.

Correct Answer: Pre-approval

Number 17. A forward commitment on a loan in which the requisite documents and underwriting have been secured and adhered to in such a manner to indicate that the loan has a high probability of being issued.

Correct Answer: Pre-approved Loan

Number 18. The statement that a borrower qualifies for a mortgage up to certain limits to provide the buyer with some evidence that he/she will be able to close a transaction. The qualifying statement is not a binding commitment and is subject to underwriting and due diligence regarding a particular transaction.

Correct Answer: Prequalification

Number 19. The administrative procedures associated with reviewing, evaluating and underwriting a mortgage application.

Correct Answer: Processing

Number 20. The analysis, evaluation and review of a mortgage or loan application to determine whether a borrower has the will (e.g., commitment based in part on credit history) and ability (e.g., income, net worth) to pay on a mortgage up to a specified level.

Correct Answer: Qualification

Number 21. The preliminary interest rate that is applied to a borrower's income to determine the maximum loan they will be eligible to receive relying on other information that is presumed to be valid.

Correct Answer: Qualification Rate

Number 22. The ratios that are used to determine the maximum mortgage for which a loan applicant is eligible.

Correct Answer: Qualification Ratios

Number 23. The generally accepted standards imposed by lenders during the underwriting process to determine whether or not to fund a mortgage.

Correct Answer: Qualification Requirements

Number 24. The ratios or percentages that lenders apply to a borrower's income to determine the maximum qualifying loan.

Correct Answer: Qualifying Ratios

Number 25. The level of income that a loan applicant certifies they earn through employment or other periodic sources of earnings.

Correct Answer: Stated Income

Number 26. Accelerated or simplified documentation, underwriting and closing of mortgages that are designed to replace or refinance existing debt, thus reducing costs and saving time and energy.

Correct Answer: Streamlined Refinancing

Number 27. The ratio of total housing related costs to the gross income of a borrower.

Correct Answer: Total Expense Ratio

Number 28. The total fixed expenses associated with financing a house including interest and principal payments, taxes, property insurance and other non-maintenance charges necessary to maintain a clean, marketable title without adding encumbrances or other claims.

Correct Answer: Total Housing Expense

Number 29. The act of conducting due diligence to help evaluate whether an investment is attractive in terms of risk/return profiles.

Correct Answer: Underwriting

Number 30. The percentage or lump sum fee that is charged by service providers and professionals for underwriting a property or investment opportunity.

Correct Answer: Underwriting Fee

Number 31. The requirements that a mortgage applicant (e.g., credit rating, income, net worth) and the underlying property (e.g., quality, market value) must satisfy in order to qualify for a loan.

Correct Answer: Underwriting Requirements