Mortgage Loan Origination Activities
What this domain tests
Mortgage Loan Origination Activities covers the workflow from lead to funded loan: application, disclosures, processing, verification, appraisal, underwriting, closing, funding, and shipping. The exam tests who does what, which disclosure is due when, how changed circumstances affect redisclosure, and how to prevent fraud and data errors.
Core rules
- Take a complete application, issue the Loan Estimate, collect supporting documents, and disclose intent to proceed. The processor verifies income, assets, employment, and title; the underwriter makes the credit decision.
- Changed circumstances can permit revised disclosures. Validate the change, redisclose within three business days, and apply the correct fee tolerance. Do not shop for a new estimate after the borrower has indicated intent to proceed.
- Order the appraisal and title work, review conditions, and clear prior-to-closing items. The Closing Disclosure must be received at least three business days before consummation; a changed CD may require a new waiting period if the APR changes beyond tolerance.
- The MLO must not pressure an appraiser, alter documents, or submit information known to be false. Report suspected fraud through the lender's channels.
- Rescission applies to certain refinances and HELOCs on a principal dwelling; it gives three business days after consummation to cancel.
Worked example
A borrower wants to close Friday. The Closing Disclosure is delivered in person on Tuesday. Wednesday, Thursday, and Friday are the three business days, so a Friday consummation is permitted if no Sunday or federal holiday intervenes. If the CD had been mailed Tuesday, the borrower is presumed to receive it Friday, and three more business days would be needed; Friday closing would be premature. The lesson: delivery method changes the date, not just the calendar.
Traps
Counting only weekdays for the CD waiting period is wrong; Saturdays count, but Sundays and federal holidays do not. Confusing the LE's three-business-day deadline with the CD's three-business-day waiting period loses marks. A revised CD does not always restart the waiting period, but material changes can.