Appendix C — The Loan File Workbook
This is your working copy of the progressive project. Forty checkpoints, one per chapter, in the order the book teaches them.
How to use it. Each chapter ends with a 🗂️ The Loan File section that contributes one piece of
the file. Do that chapter's checkpoint here before moving on. By Chapter 40 you will have originated
a complete purchase loan — every document, every calculation, every decision — and you will be able
to hand the finished file to someone else and have them follow it.
Do not skip the "what this does not settle" line. It is the most valuable habit in the book. A loan officer who can state precisely what they do not yet know is a loan officer who does not promise things on day one that fall apart on day forty.
The file
| Property | 4412 Linden Street, Ridgeview — 1,780 sq ft, 3 bed / 2 bath, single-family detached, built 1994 |
| Market | inner-ring suburb of a mid-size metro (~700,000) |
| Contract price | \$385,000 |
| Occupancy | primary residence |
| Borrowers | two, married, both on the loan, first-time buyers |
| Referral | a buyer's agent you have closed four prior files with |
| Contract length | 45 days |
Everything else you will establish yourself.
Running worksheet — fill this in as you go
Income
| Borrower | Component | Basis | Monthly |
|---|---|---|---|
| B1 | base | ||
| B1 | variable | ||
| B2 | base | ||
| B2 | variable | ||
| Total qualifying income |
Credit
| Borrower | Scores | Middle |
|---|---|---|
| B1 | ||
| B2 | ||
| Representative score |
Debts
| Debt | Payment | Payments remaining | Counted? |
|---|---|---|---|
| Total |
Assets
| Source | Amount | Sourced? | Seasoned? |
|---|---|---|---|
| Total verified |
The structure
| Program | |
| Down payment | |
| Loan amount | |
| LTV / CLTV | |
| Note rate | |
| Points or credit | |
| Lock period and date | |
| Mortgage insurance |
The payment
| Component | Monthly |
|---|---|
| Principal and interest | |
| Property taxes | |
| Homeowners insurance | |
| Mortgage insurance | |
| HOA | |
| PITI |
The ratios
| Arithmetic | Result | |
|---|---|---|
| Housing | ||
| Back-end | ||
| Payment shock | ||
| Reserves after closing | months |
Part I — The Foundation
Chapter 1 · Open the file
Name every party and state what each decides. Then answer, in one sentence: if this loan closes, who will own the debt in a year, and who will the borrowers actually pay?
Mark every element of your answer supported (you can point to a fact) or assumed. You should end up with very little in the first column. That is the correct result.
| Role | Who, on this file | What they decide |
|---|---|---|
| Borrowers | ||
| Seller | ||
| Buyer's agent | ||
| Loan officer | ||
| Processor | ||
| Underwriter | ||
| Closing agent | ||
| Lender | ||
| Investor | ||
| Servicer |
Chapter 2 · Why this loan is a thirty-year fixed at all
Complete the counterfactual. What would these borrowers' options have been in 1928?
| 1928 structure | Today | |
|---|---|---|
| Down payment required | ||
| Term | ||
| Amortization | ||
| Owed at year 5 | ||
| Equity built by payments in 5 years | ||
| Renewal risk | ||
| Do they buy this house? |
Then write one paragraph a borrower would understand explaining why \$38,000 buys a \$385,000 house. Do not use the words "leverage" or "amortization."
Chapter 3 · The originator's identifier
Look yourself up on NMLS Consumer Access — or look up any loan officer. Write down exactly what a borrower can see.
Then write the two sentences you would say to a borrower who asks "how do I know you're legitimate?" You may not use the sentence "I'm licensed." Tell them how to check.
Chapter 4 · Compute the file's core numbers
Build the first twelve rows of the amortization schedule by hand, using only the one-line rule and rounding interest to the cent. Confirm your month-12 balance.
Then rebuild the entire file at 10% down: new loan amount, LTV, P&I, MI, PITI, both ratios, and the change in cash to close. Which single line surprises you most?
Chapter 5 · The program shortlist
Work the six-question decision tree. Write one sentence for each eliminated program stating why it is out — "not eligible" is not an acceptable answer without a reason.
| Program | In or out | Why |
|---|---|---|
| VA | ||
| USDA | ||
| Jumbo | ||
| Portfolio | ||
| Non-QM | ||
| Conventional | ||
| FHA |
Then list every fact you would need to choose between the two survivors, and mark which you have.
Chapter 6 · Map the calendar onto the pipeline
Place each day of the file against a pipeline stage and an owner. Then answer: where did the days actually go, and which delays were controllable?
Part II — The Borrower
Chapter 7 · Where this loan came from
Trace the referral. What did that agent relationship cost to build, and what is it worth? Compute the lifetime value of one agent relationship.
Chapter 8 · The discovery call and the pre-qualification letter
Write the letter you would issue on day 1, with credit pulled and nothing else verified. State explicitly what it may and may not say. Then compute payment shock and write the sentence you would use to raise it.
Chapter 9 · The application as taken
Identify the exact moment all six application items were in hand, and therefore when the Loan Estimate clock started. List the initial disclosure package.
Chapter 10 · The credit report
Record both borrowers' scores and derive the representative score. Read every tradeline for its remaining term, not just its payment. Then note what the report does not show.
Chapter 11 · The income worksheet
Build the qualifying income from its components, and for each state the documentation that supports it and the rule that governs it.
Chapter 12 · Assets and reserves
Source and season every dollar. Document the gift. Compute cash to close and reserves after closing, in months of PITI.
Chapter 13 · The structure decision
This is the decision checkpoint. Present conventional and FHA side by side — cash, payment, MI termination, and total MI over the term. Then run the rate/point grid and compute break-even.
Write the recommendation you would actually make, the question you would ask the borrower to decide it, and what would change your answer.
Part III — Underwriting
Chapter 14 · Read the file against the guidelines
Eligibility, DTI, reserves, and layered risk. Identify every place your lender's overlay is stricter than the agency guideline.
Chapter 15 · The findings report
Record the recommendation and transcribe the verification messages. The findings wrote your document list — copy it out.
Chapter 16 · Price the same borrower as an FHA loan
Show the comparison you ran, and state which figure decides it.
Chapter 17 · Why this file is not VA or USDA
And what would have changed if either borrower were a veteran. Compute it.
Chapter 18 · The appraisal
Read the grid and the comparables. Then answer the counterfactual: what would a \$372,000 value have done to this file? Compute the new maximum loan, the new down payment, and the gap.
Chapter 19 · The conditions
List all eleven. Mark each prior-to-doc or prior-to-funding, and name the owner and the document that clears it. Then work the day-44 problem in full.
Part IV — The Transaction
Chapter 20 · The purchase contract
Record every date that governs your file. Identify the contingencies and what each protects.
Chapter 21 · Title and insurance
Read the commitment. What is on Schedule B-II, and what has to happen before closing?
Chapter 22 · The Loan Estimate to Closing Disclosure comparison
Line by line. Identify every change, classify each as zero-tolerance, ten-percent, or unlimited, and determine whether any cure is owed.
Chapter 23 · Closing day
The funding sequence, the escrow account setup, and the first payment date. Then: when does the mortgage insurance come off, and what does the borrower have to do?
Part V — Compliance and the License
Chapter 24 · RESPA and TILA applied to this file
Every fee, every referral relationship, every disclosure. Where is the Section 8 exposure?
Chapter 25 · Fair lending applied to this file
What will the loan application register record? Then identify what would have been a violation at three specific points in this transaction.
Chapter 26 · What you earned
Compute your compensation on this file under three structures. Then compute what the file cost to make.
Chapter 27 · The fraud lens on day 44
What was it, what was it not, and how do you tell? Write the analysis you would put in the file.
Part VI — The Money Behind the Loan
Chapter 28 · Where the money came from and where the loan went
Trace it: pool, security, servicer.
Chapter 29 · Rebuild the quote
Start from a base price and apply this file's adjustments until you arrive at the rate. Every basis point must be accounted for.
Chapter 30 · The lock decision
Day 12 and day 42. What would floating have cost? Who paid for the extension, and why?
Chapter 31 · The same file, three ways
Originate it as retail, as a broker, and as a correspondent. What changes for the borrower, and what changes for you?
Part VII — Specialized Lending
Chapter 32 · Re-run the file with a self-employed borrower
Replace B2's W-2 income with the Fulton Avenue overlay. Complete the cash flow analysis and recompute both ratios. Does the file still work?
Chapter 33 · What assistance did they not use?
They are first-time buyers. What was available, and should they have used it?
Chapter 34 · What would have made this a non-QM file?
And what would it have cost?
Chapter 35 · One year later
They want to add a bathroom. Which product, and why?
Part VIII — The Business and the Career
Chapter 36 · The file as milestones
Map the fifty-one days across the origination system. Where did technology help, and where did it not?
Chapter 37 · The refinance question
Rates fall 150 basis points in fourteen months. Should they refinance? Show the break-even — and compute it three ways, so you can see which one is wrong.
Chapter 38 · The post-close plan
The review, the anniversary, the referral ask. Write the actual sequence with dates.
Chapter 39 · Build the board
This file plus twenty-nine others. Which one is about to die, and how do you know?
Chapter 40 · The capstone
Assemble the complete file. Then answer the question this workbook has carried since Chapter 1:
The borrowers were also shopping an online lender with a lower advertised rate. Was it actually better?
You have had enough to answer this since Chapter 29. Work it before you read Chapter 40's reveal — rebuild the competitor's advertised quote for this file, with these borrowers' characteristics, and see what you get.
Then write your first-year business plan.
A note on the numbers
Every figure in this file is constructed for teaching. It is internally consistent and has been checked, which is a different claim from being real. If you find arithmetic that does not resolve, that is a defect worth reporting — and finding it is exactly the skill the book is trying to build.