Chapter 17

Question 1

Mortgage banker

Answer 1

Mortgage Banker – A company, individual or institution that originates mortgages. Mortgage bankers use their own funds, or funds borrowed from a warehouse lender, to fund mortgages.

Question 2

Mortgage broker

Answer 2

Mortgage Broker – An intermediary who brings mortgage borrowers and mortgage lenders together, but does not use its own funds to originate mortgages. A mortgage broker gathers paperwork from a borrower, and passes that paperwork along to a mortgage lender for underwriting and approval. The mortgage funds are then lent in the name of the mortgage lender. A mortgage broker collects an origination fee and/or yield spread premium from the lender as compensation for its services.

Question 3

Pre-approval

Answer 3

Pre-approval – An evaluation of a potential borrower by a lender that determines whether the borrower qualifies for a loan from the lender, or the maximum amount that the lender would be willing to lend.

Question 4

Pre-qualification

Answer 4

Pre-qualification – A process whereby a loan officer takes information from a borrower and makes a tentative assessment of how much the lending institution is willing to lend them.

Question 5

Pre-application and fee agreement

Answer 5

Pre-application and Fee Agreement – A form used between mortgage brokers or mortgage bankers and a home buyer that provides certain disclosures prior to the application of a mortgage.

Question 6

Mortgage broker dual

Agency disclosure form

Answer 6

Mortgage Broker Dual Agency Disclosure Form – A banking department form required when a person is acting as a mortgage broker and a real estate broker in the same transaction.

Question 7

Underwriting

Answer 7

Underwriting – The process by which a lender decides whether a potential creditor is creditworthy and should receive a loan.

Question 8

Rate lock

Answer 8

Rate Lock – An agreement between a borrower and a lender that allows the borrower to lock in the interest rate on a mortgage over a specified time period at the prevailing market interest rate.

Question 9

Non-conforming loan

Answer 9

Non-conforming Loan – A loan that fails to meet bank criteria for funding.

Question 10

Lender rebate

Answer 10

Lender Rebate – A payment to a mortgage broker by a lender.

Question 11

Mortgage commitment.

Answer 11

Mortgage Commitment – A written notice from the bank or other lending institution saying it will advance mortgage funds in a specified amount to enable a buyer to purchase a house.

Question 12

mortgage broker dual agency disclosure form

Answer 12

Mortgage Broker Dual Agency Disclosure Form – A banking department form required when a person is acting as a mortgage broker and a real estate broker in the same transaction.

Question 13

This document is the most important document in a loan package, also known as a 1003…?

Answer 13

Loan application form