sofe afe practice test

Evidences the fair market value of the property that is security for the mortgage loan. The appraisal
value is used to determine that the loan to market value ratio is in compliance with regulatory
requirements. It also is used to determine any non-admitted mortgage loan amount. Appraisals are
obtained from:

• A. Independent, qualified appraisers
• B. The company’s own qualified appraisers
• C. Federal Housing Administration
• D. Any one out of A and B

During the underwriting process, information related to a mortgage loan is collected, and this
information is the basis for a final decision as to whether or not the loan should be made. The
documents generated during this underwriting process are all of the following EXCEPT:

• A. Loan applications
• B. Credit reports
• C. Borrower’s financial statements
• D. Periodic inspection reports

Subsequent to the funding of a loan, the most common document/s obtained is/are:

• A. New or updated appraisals as evidence of the current value of the property
• B. Current financial statements on the borrower or the property, if the property is income producing, as evidence of the borrower’s continuing financial strength and of the property’s continuing ability to produce income
• C. Periodic inspection reports as evidence of the physical condition of the property
• D. Borrower’s financial statements

It indicates the lender’s commitment to make a loan in accordance with the terms specified either in
the borrower’s loan application or in the terms the company approves for the loan.

• A. Verification of deposits
• B. Commitment letter
• C. Appraisal
• D. Original note

Direct serving loans method requires a system of good internal control and requires that the
functions be split between the Accounting Department and the Investment Department. In such a
case the Accounting Department is responsible for all of the following EXCEPT:

• A. Supplying the Investment Department with correct data and reports that summarize all loan transactions
• B. Alerting the Investment Department promptly whenever an exception to the normal processing routine occurs
• C. The design, maintenance, and accuracy of accounting records, for periodic management and exception reports, and for statutory statement preparation
• D. Its records may or may not provide the needed data to support this reporting function

Direct serving loans method requires a system of good internal control and requires that the
functions be split between the Accounting Department and the Investment Department. The
Investment Department is responsible for promptly supplying the Accounting Department with:

• A. Accounting data on new loans
• B. Resolving few exceptions reported to it by the Accounting Department, i.e., when a borrower defaults on a loan payment
• C. Data related to changes in existing loans, which affects the accounting function
• D. Alerting the Investment Department promptly whenever an exception to the normal processing routine occurs

Generally, a company earns a servicing fee when it retains the servicing of a block of loans in which it
has sold all or part of the block. Service fees received from sales of participations are recorded as:

• A. Gross income and not netted against interest income remitted to the acquiring party
• B. Unearned revenue and not netted against interest income remitted to the acquiring party
• C. Gross income
• D. Netted against interest income remitted to the acquiring party

A mortgage servicer performs all of the servicing functions. The servicer remits all funds received on
the serviced loans to the company on a monthly or other periodic basis and usually reports all
transactions, including foreclosures and transactions related to foreclosed property. The contract
between the company and servicer should provide that the:

• A. Company can periodically audit the servicer’s records and files pertaining to the loans owned by the company. In lieu of making the audit, the company can agree to receive an annual audit report pertaining to its loans from the servicer’s independent certified public accountants. This is the single audit concept
• B. Servicer should not have a fidelity bond and an errors and omission policy of stipulated minimum amounts
• C. Servicer must have a fidelity bond and an errors and omission policy of stipulated minimum amounts
• D. Servicer must have an annual independent audit, with a copy of the audited financial statements sent to the company within a certain period of time after the end of the servicer’s fiscal year

A company that has its loans serviced, for whatever reason, is usually charged a servicer’s fee. This
fee is usually expressed:

• A. As an annual fraction of a percentage of each interest payment
• B. As an annual fraction of a percent of the principal balance of the loans or based on a percentage of each interest payment
• C. As a monthly fraction of a percent of the principal balance of the loans or based on a percentage of each interest payment
• D. As a monthly fraction of a percentage of each interest payment

Accounting transactions that occur after the initial investment in a loan and during the period the
loan is being serviced fall into two broad categories. Which one of the following is out of those
categories?

• A. Processing transactions, which are recurring and similar in nature for all mortgage loans,
• B. processing transactions, which are not recurring and opposite in nature for all mortgage loans
• C. Unusual transactions
• D. None of these