Mortgage Loan Origination Activities
Mortgage Loan Origination Activities
This domain tests the origination workflow: taking a valid application, issuing disclosures, processing and underwriting, managing rate locks, and closing. Questions often hinge on sequence and timing-what must happen before you collect a fee, order an appraisal, or change a loan term.
From application to closing
- An application exists under Reg Z when you receive six pieces of information: borrower name, income, Social Security number, property address, estimated value, and loan amount.
- Provide the Loan Estimate within three business days; collect only a credit report fee before the borrower indicates intent to proceed.
- Process: verify income, assets, and employment; order title, appraisal, flood determination, and any inspections; run AUS; clear conditions.
- Lock management: document the lock date, expiration, rate, points, and extension costs.
- Closing: Closing Disclosure timing, settlement, funding, recording, and post-closing file review.
Worked example
A borrower locks a 60-day rate at 5.00% on Day 1. The appraisal is delayed and closing slips to Day 62. The lender may extend the lock, but the extension fee and any changed pricing must be disclosed and agreed to; the originator cannot simply let the lock expire and quote a new rate without documenting the change. If the delay is a valid changed circumstance, a revised Loan Estimate may be permitted, but the reason and date must be recorded.
Traps that cost marks
- Ordering an appraisal or collecting an appraisal fee before the Loan Estimate and intent to proceed.
- Treating a pre-qualification letter as a full underwriting approval.
- Missing that a revised Loan Estimate needs a valid changed circumstance and timely delivery.
- Failing to document lock terms and extension fees in the file.