Preview Questions Loan Officer | Role Specific Skill

Question 1: According to the Ability-to-Repay (ATR) rule under Dodd-Frank, what must lenders assess before making a loan?

Which action should you take?

Choose only one option

The borrower's history of past loans and their repayment performance

The borrower's ability to make payments based on their income, assets, and debts

The borrower's credit score and employment status

The borrower's loan-to-value ratio and down payment amount

Question 2: For a refinance loan, which document is required to establish the borrower's existing debt obligations?

Which action should you take?

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The mortgage statement of the current loan that the borrower seeks to refinance

The real estate appraisal, showing the property's current market value

The borrower's bank statement, showing the account balance

The borrower's credit report, which displays existing liabilities

Question 3: What is the purpose of a convertible bond?

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It offers a fixed interest rate with no option for early redemption

It guarantees a fixed return on investment, with no additional risks to the bondholder

It can be redeemed at face value only if the bondholder agrees to accept a lower interest rate

It allows the bondholder to convert the bond into a specified number of shares of the issuing company

Question 4: What distinguishes a conventional loan from a government-backed loan, such as an FHA or VA loan?

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Conventional loans have stricter requirements for credit score, income, and down payment

FHA loans are typically available only for first-time homebuyers

Conventional loans are insured by the federal government

Government-backed loans are not subject to interest rate limits

Question 5: How is the FICO score typically used in creditworthiness assessment?

Which action should you take?

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To evaluate the collateral value associated with the loan

To predict the likelihood of a borrower defaulting on a loan

To determine the borrower's income stability

To assess the borrower's total debt burden

Question 6: A client wants a loan despite high debt-to-income ratio. How would you approach this consultation?

Which action should you take?

Choose only one option

Suggest a higher loan term to reduce the monthly repayment burden

Offer a co-signer or guarantor option to make the loan application viable

Advise them to reduce existing debt before applying

Explain the long-term impact of high debt-to-income ratio and recommend adjusting expectations