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[Pages:51]BEHIND THE SCENES OF THE RESIDENTIAL

MORTGAGE

How A Mortgage Is Processed

Behind the Scenes of the Residential Mortgage

BEHIND THE SCENES OF THE RESIDENTIAL MORTGAGE

How A Mortgage Is Processed

Course Description

This course gives agents a strong understanding of what it takes to process a mortgage, what happens behind the scenes that brokers and borrowers do not see, and how the decision to issue the mortgage is made. It looks at the borrower's first contact/application with a loan officer, the steps that a lender takes to process the loan, and what the mortgage requires to be completed and go to closing. With this education brokers will be better able to assist their clients as the lender processes the mortgage.

Learning Objectives:

Objective 1: Knowledge To identify and define:

? The different roles of mortgage brokers, mortgage bankers and retail banks in the mortgage process.

? The functions of and differences between the primary mortgage market and the secondary mortgage market.

? What information is required in order to create and process a mortgage.

? The various types of loan programs available. ? Why a particular loan program would be more suitable for different borrowers. ? How the loan is processed once the application is submitted. ? What a mortgage needs to close. ? Who is involved the closing of the mortgage and what their duties are.

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Behind the Scenes of the Residential Mortgage

Objective 2: Comprehension and Analysis To aid the student in being able to explain and distinguish:

? The individuals and markets involved in the mortgage process, their functions, benefits and disadvantages.

? The criteria on which a borrower is evaluated. ? How a borrower would be placed into a particular mortgage. ? The different types of mortgages available. ? The terms of different mortgage types. ? The duties and obligations of those involved in processing and closing the mortgage.

Objective 3: Application and Evaluation To prepare the student to be able to interpret and evaluate with a client:

? The characteristics and benefits of the client working with a mortgage broker, mortgage banker or a retail banker.

? Which lender might be more suitable and beneficial for the client.

? Discuss the materials necessary for a loan origination and analyze how they are used.

? How the various mortgage programs apply to the borrowers' needs.

? What is involved in closing the loan. ? Any questions the client might have in trying to understand what is happening as the mortgage progresses from creation to closing.

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Behind the Scenes of the Residential Mortgage

The Timed Course Outline:

A. Loan Originators, Different Types Of Lenders B. Primary & Secondary Markets C. Loan Origination, Points, Process Including Credit Report and

Application Information D. Loan Programs And Types, PMI, APR E. The Finalization Of The Loan-Who Are They and What Do They Do F. The Closing Total Time

20 mins 15 mins 33 mins 32 mins 30 mins 20 mins 150 mins

E-Book Self-Study Program

If you are taking this course via E-book self-study please review the following prior to beginning your program.

Maximum Allowable Time To Complete Your Program: You have 3 Months to complete this Continuing Education Course. No extensions are allowed. Failure to complete your course in the allotted time will result in dismissal from the course and forfeiture of your course tuition. While we grant students three months to complete this course you are responsible for completing your course, taking and passing the final exam prior to your specific required CE renewal cycle deadline date.

Begin your Course: This course consists of Chapters, Lessons or Sections. Begin your course by reading Chapter 1 in the text. At the end of the chapter complete any end of Chapter Review Questions presented. By completing the end of Chapter exams students are able to grade themselves as to how well they comprehend the chapter materials. When you have completed Chapter 1 proceed to the next Chapter.

Instructor Assistance: During your course of study contact our office if you need instructor assistance. We will share your contact information with an instructor, they will contact you. Please allow 24 hours for an instructor to contact you.

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Behind the Scenes of the Residential Mortgage

Final Examination: Students must take and pass a 25 question final exam in order to receive credit for this course. If you have completed your reading assignments and end of chapter exercises you are eligible to take your Final Exam. Final Exam Appointments: Final exam appointments can be made locally or with an out-of-town Exam Proctor. To schedule your final exam appointment, please call (312) 803-4900 or email central@. You can also visit to obtain the appropriate form. Course Completion: When you successfully complete your final exam you will receive a transcript. Depending on the number of students testing at any given time we reserve the right to mail the documents to students within 7 ? 10 working days after the date of the final exam. Failed Final Exams: If you fail your final exam you may retake the Final exam within two weeks; follow the instructions outlined above for Final Exam appointments. Students failing a second time need to re-enroll and retake this course at the full course tuition. CE Compliance Reporting: IDFPR requires each licensed education provider approved to offer continuing education courses to submit to the licensing agency, on or before the 15th of each month, a report of those licensees who have successfully completed a continuing education course offered by the provider during the preceding calendar month. We will report your compliance to IDFPR on the 15th of the month following your final exam date. Please call (312) 803-4910 if you have any questions or email info@rres-. Thank you.

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Behind the Scenes of the Residential Mortgage

BEHIND THE SCENES OF THE RESIDENTIAL MORTGAGE

How A Mortgage Is Processed

WHAT IS A MORTGAGE? A mortgage is a temporary, voluntary lien on a piece of real estate that is being pledged as security against the mortgagor's repayment of a loan to the mortgagee. There are actually two parts to a mortgage, the promissory note or "note" and the mortgage document. The promissory note is the borrower's personal promise to repay the loan. It contains:

? The amount of the debt. ? The timing and method of payment. ? The interest rate and whether it is prepaid or paid in arrears. The promissory note does not address collateral or security for the loan. The mortgage is the document in which the borrower pledges the property as collateral or "security" for the loan. This document makes the mortgage a "secured loan" or "secured lien". If the borrower does not repay the loan, the lender's money is secured by the mortgage. The mortgagor is the borrower/buyer and the mortgagee is the lender. The actual amount that the borrower needs to repay includes: ? The amount of money borrowed, a.k.a. "the principal." ? The amount of interest accrued over the life of the loan. ? Any other fees that the lender/bank and the borrower have agreed upon, i.e. Private Mortgage Insurance (PMI), Discount Points, etc.

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Behind the Scenes of the Residential Mortgage

The process begins with Loan Officers/Loan Originators/ Mortgage Originators who are mortgage brokers, mortgage bankers, representatives of banks, credit unions and other financial institutions who help borrowers in acquiring a loan. The mortgage broker and the mortgage banker:

? Have access to: w Banks. w Investors. w Lenders.

? Are able to "shop" for the best loan program and best rates for the borrower.

? May offer an advantage over the retail bank in that they work on behalf of the borrower, not the bank.

? Are able to seek out the best or lowest mortgage rates currently available. In contrast, the retail bank loan officer works on behalf of the banking institution by whom he/she is employed and may not have as much flexibility in "shopping" for the best rates for the borrower.

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Behind the Scenes of the Residential Mortgage

DIFFERENCES BETWEEN A MORTGAGE BROKER AND A MORTGAGE BANKER:

A Mortgage Broker:

? "Brokers" a transaction between the borrower and the lender of the mortgage funds.

? Facilitates the loan origina tion but is not a part of the financial institution supply ing the money.

? Does not fund the mortgage.

? Collects an origination fee as payment for the work.

? Earns money by charging the borrower closing costs upfront.

? Is not a mortgage banker, but might facilitate the transaction for a mortgage banker by bringing the mortgage banker as an investor and the borrower together.

? Does not retain a portfolio of mortgages.

? Does not close mortgages in its own name.

? Does not service the loan.

A Mortgage Banker:

? Is an intermediary, an institution or a company that originates mortgages.

? May use its own funds to close the mortgage in its own name or.

? May choose to broker the loan out, which will be funded directly by the end investor.

? May choose to hold the mortgage in its own "portfolio."

? May choose to sell the mortgage to another investor or to the secondary market.

? May opt to service the mortgage.

? May opt to sell the rights to service the mortgage to a different financial institution.

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