Preview Questions Loan Officer | Role Specific Skill

Question 1: How would you approach a client seeking a loan but has unrealistic expectations regarding interest rates and terms?

Which action should you take?

Choose only one option

Encourage them to adjust their expectations by demonstrating how rates vary based on their credit score

Offer them alternative financial products with slightly different terms to match their needs

Offer them the best available option but with higher interest rates

Gently guide them toward more realistic expectations by explaining market trends

Question 2: How do you assess the risk of lending to a client with a high loan-to-value (LTV) ratio in a declining property market?

Which action should you take?

Choose only one option

Offer the loan with flexible repayment terms to protect the client's ability to make payments

Adjust the interest rate upward to account for the higher risk of default

Decline the loan due to the risk associated with declining property values

Require additional collateral or a co-signer to mitigate the risk

Question 3: In the loan documentation process, what is the purpose of the closing disclosure?

Which action should you take?

Choose only one option

To disclose the final terms and costs of the loan, including interest rate, closing costs, and monthly payments

To document the borrower's assets, liabilities, and monthly income

To confirm the borrower's eligibility for a government-insured loan

To evaluate the borrower's credit history and provide a loan estimate before final approval

Question 4: Which regulation mandates that loan officers ensure borrowers receive clear and timely disclosures?

Which action should you take?

Choose only one option

Fair Lending Act

Home Mortgage Disclosure Act (HMDA)

Truth in Lending Act (TILA)

Real Estate Settlement Procedures Act (RESPA)

Question 5: In a mortgage-backed security (MBS), how is the risk typically mitigated for investors?

Which action should you take?

Choose only one option

By providing a high loan-to-value ratio

By pooling many mortgages together and diversifying risk

By setting a fixed interest rate for all mortgages

By insuring the mortgages through a government agency

Question 6: When offering a business line of credit, which of the following is the most important financial product consideration?

Which action should you take?

Choose only one option

The business's liquidity, ensuring they can repay outstanding balances as they fluctuate

The business's debt-to-equity ratio, determining their overall financial stability and borrowing capacity

The business's industry, determining its risk exposure and market fluctuations

The business's fixed assets, which will provide collateral in case of non-repayment