Preview Questions Loan Officer | Role Specific Skill

Question 1: Which of the following is a key regulatory requirement for loan officers under the Payment Protection Act (PPA) in relation to consumer credit products?

Which action should you take?

Choose only one option

Loan officers must offer higher credit limits on loan products to increase sales

Loan officers must disclose all third-party fees associated with loan products

Loan officers must inform the borrower of their right to cancel payment protection products at any time

Loan officers must explain the repayment options available for credit products to the borrower

Question 2: How do you approach advising a self-employed client seeking a mortgage loan on how to improve their creditworthiness?

Which action should you take?

Choose only one option

Advise them to reduce their overall debt by paying off outstanding loans and improving credit history

Suggest that they provide additional documentation, such as tax returns and profit-and-loss statements

Recommend that they increase their credit utilization ratio to build a stronger credit profile

Encourage them to reduce their debt-to-income ratio by consolidating debts

Question 3: What is the primary advantage of a construction-to-permanent loan over a traditional construction loan?

Which action should you take?

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The borrower only needs to apply for one loan that covers both construction and permanent financing

It is offered only for residential single-family homes

The interest rate is fixed for the entire loan term, unlike construction loans

The loan requires no down payment for the first two years

Question 4: How do you ensure that the borrower's ability to repay a loan is adequately evaluated during loan origination?

Which action should you take?

Choose only one option

By calculating the borrower's debt-to-income (DTI) ratio

By evaluating their employment history alone

By only considering the size of their down payment

By relying solely on their credit score

Question 5: In relation to loan documentation, which of the following is typically required to assess a borrower's ability to repay a mortgage loan?

Which action should you take?

Choose only one option

Two years of tax returns to verify income stability and ensure sufficient repayment capacity

A housing appraisal to validate the value of the borrower's property collateral

A recent credit report detailing the borrower's credit score and history

A statement of net worth showing both assets and liabilities of the borrower

Question 6: When originating a commercial loan, what is one of the key considerations when assessing the borrower's application?

Which action should you take?

Choose only one option

The borrower's relationship with the bank, rather than their financial history

The borrower's personal credit score, similar to residential loan applications

The borrower's ownership of physical assets, regardless of their financial situation

The financial health of the business and its ability to repay the loan