Preview Questions Loan Officer | Role Specific Skill

Question 1: What is the primary concern when analyzing the risk of a loan applicant with a high debt-to-income ratio?

Which action should you take?

Choose only one option

The client's ability to make timely repayments without financial strain

Whether the client's assets are enough to cover the loan amount in case of default

The client's credit score, as it's more predictive of loan performance

The client's current employment situation and future job security

Question 2: Which of the following is a key component of the Real Estate Settlement Procedures Act (RESPA)?

Which action should you take?

Choose only one option

Lenders must provide a 10-day cooling-off period for borrowers to change their mind about the loan

Lenders must offer loan products with equal terms and rates to all applicants

Lenders must conduct background checks on real estate agents involved in the loan process

Lenders must provide a Good Faith Estimate (GFE) within three days of receiving the application

Question 3: What is the primary risk of approving a loan based on overstated collateral value?

Which action should you take?

Choose only one option

The potential for under-collateralization if the property value fluctuates

The potential for the borrower to default due to unmanageable payments

The risk of legal complications during foreclosure

The excessive loan amount compared to market standards

Question 4: When reviewing loan risk for a borrower applying for a large personal loan, what is a key indicator of future repayment ability?

Which action should you take?

Choose only one option

The amount of collateral they can offer, independent of other financial factors

The borrower's history with previous loans, regardless of their current financial situation

Their income-to-expense ratio and long-term debt obligations

Their credit score, assuming it's within an acceptable range

Question 5: When consulting a commercial property buyer for a mortgage loan, what aspect of the property should you focus on for loan approval?

Which action should you take?

Choose only one option

The income-producing potential of the property, especially if it's an investment property

The property's location and how it influences market value and future resale potential

The client's down payment and how it affects the loan-to-value ratio

The condition of the property and whether it meets the lender's underwriting criteria

Question 6: Which of the following financial ratios is most commonly used to determine the repayment capacity of a loan applicant?

Which action should you take?

Choose only one option

Loan-to-value (LTV) ratio

Return on equity (ROE)

Current ratio

Debt-to-income (DTI) ratio