Chapter 39 — Self-Check Quiz

Twenty-six questions: eighteen multiple choice, eight short answer. The multiple-choice items are written in the style of the SAFE MLO test where the material is exam-relevant; most of this chapter is practice rather than examination material, and the questions reflect that honestly.

Answer everything before opening the key.

Multiple choice

1. A new loan officer's first genuine pipeline crisis is most likely to be caused by:

a) One unusually complex self-employed file b) An appraisal that comes in below contract price c) Twelve simple files moving at the same time d) A borrower who fails to disclose a debt

2. According to the chapter, a file that has generated no communication in eleven days is best described as:

a) Low risk, because no problems have been reported b) High risk, because absence of communication is indistinguishable from absence of work c) Complete, since conditions have presumably cleared d) Blocked, since something must be preventing progress

3. On the Linden Street file, which stage consumed the largest share of the fifty-one days?

a) Waiting on third parties b) Underwriting turn time c) Conditions d) Lead to application

4. In the Linden Street third-party window (day 7 to day 19), the binding constraint was:

a) The appraisal, at nine days b) The title commitment, at twelve days c) The verification of employment d) The flood certification

5. All nine prior-to-doc conditions on the Linden Street file cleared between day 29 and day 33. How many business days did that take, and why?

a) Five, because day 29 to day 33 is five calendar days b) Four, because one day is never counted c) Three, because days 31 and 32 fell on a weekend d) Two, because conditions cleared in batches

6. The chapter's triage rule ranks files by:

a) Loan amount, largest first b) Time until something becomes irreversible, shortest first c) Expressed urgency from borrowers and agents d) Days in the pipeline, oldest first

7. Which of the following is not one of the four shapes of irreversibility the chapter names?

a) A clock that expires and costs money to restart b) A contract right that lapses c) A regulatory waiting period that has not started d) An underwriter who is behind on their queue

8. Chapter 19's rule — that a condition needing somebody else's signature should be identified on a Wednesday rather than at four o'clock on a Friday — is fundamentally a rule about:

a) Difficulty b) Lead time c) Politeness d) Documentation quality

9. On a pipeline board, an empty blocking-party cell means:

a) The file is complete and requires no attention b) The file is fine and should be filtered out c) Nobody owes the next action, which makes the file unowned rather than safe d) The board has not been updated

10. The chapter's board uses two filters. Their intersection identifies:

a) Files closing this week b) Files where something is closing in and nothing is happening c) Files with the largest loan amounts d) Files whose borrowers have called most recently

11. The floor in a touchpoint cadence is:

a) The minimum loan amount that receives proactive updates b) The lowest-priority file on the board c) A maximum interval after which a file receives an update even if nothing has happened d) The earliest hour at which updates may be sent

12. Why does the chapter argue that a milestone-only cadence fails?

a) Milestones are too frequent for borrowers b) Milestones cluster in the active parts of a file and disappear in exactly the gaps where files die c) Milestones cannot be automated d) Agents do not want milestone updates

13. Pull-through rate is most usefully computed as:

a) Applications divided by leads b) Loans funded divided by loans locked c) Loans approved divided by loans submitted d) Loans funded divided by loan officers

14. Fallout is most expensive to a lender when:

a) Rates rise, because borrowers hurry to close b) Rates fall, because the lender must buy back forward sales at higher prices c) Rates are flat, because volume is lowest d) Fallout cost is unrelated to the direction of rates

15. Which statement about the Linden Street file's appearance in a pull-through report is true?

a) It appears as fallout, because the closing date was missed b) It appears as a success, because it funded c) It does not appear, because the lock was extended d) It appears as a partial, weighted by days overdue

16. In the chapter's handoff rule, which two things does the loan officer never transfer to the processor?

a) The conditions and the orders b) The calendar and the borrower relationship c) The disclosures and the lock d) The appraisal and the title work

17. A Level 2 escalation, per the chapter's ladder, should bring:

a) An expression of urgency b) A reminder of the referral relationship c) Arithmetic — the specific cost and date at stake d) A request to reassign the file

18. Under the Equal Credit Opportunity Act and Regulation B, a creditor must notify an applicant of the action taken on a completed application within:

a) 3 business days b) 10 days c) 30 days d) 60 days

Short answer

19. State, in one sentence each, why noise is a safety signal and silence is a risk signal.

20. Name the three reasons a file goes quiet. Which is benign, and why can your inbox not tell them apart?

21. Give the Linden Street velocity decomposition: seven stages, day ranges, and days. Confirm the total.

22. The chapter derives a closing that was available on day 37. Show the derivation from day 33, and state what that closing date would have done to (a) the lock, (b) the day-41 furniture purchase, and (c) the contract's day-45 closing date.

23. Compute the lock extension on the Linden Street file — 0.250 point on a \$365,750 loan — and express it two ways: as a per-day figure across the fifteen days it bought, and as a fraction of the discount point the borrowers originally paid.

24. Explain what a capacity spiral is and why it means an originator does not discover their capacity limit and stop.

25. Name the three buckets of fallout the chapter uses, plus the fourth cause it says is systematically misfiled into them. Why does that misfiling matter?

26. The chapter says the weekly pipeline review "happens whether or not you have time." Give the structural argument for that rule — not the motivational one.

Answer key **1. c)** Twelve simple files moving at the same time. Hard files concentrate attention; volume of easy work scatters it. The failure is exceeding the ability to hold state, not exceeding analytical skill. **2. b)** High risk. From an inbox, safe silence and fatal silence look identical, and only a deliberate look at every file on a schedule can distinguish them. **3. c)** Conditions — 19 days of 51, or 37.3%. Underwriting took 5 days (9.8%); third-party wait took 12 days (23.5%). **4. b)** The title commitment, at twelve days (day 7 to day 19). The appraisal returned day 16, nine days out — its turn time was entirely absorbed by the title track and therefore irrelevant to the calendar. **5. c)** Three business days — day 29, day 30, and day 33. Days 31 and 32 were a weekend. Nine conditions in three business days is excellent work, which is exactly what makes the eleven days that followed so damning. **6. b)** Time until something becomes irreversible, shortest first. Ties break toward files whose next action belongs to someone outside your building, because their clock has not started and yours has. **7. d)** An underwriter behind on their queue. That is a delay and a candidate for escalation, but nothing about it is irreversible. The four shapes are: an expiring clock that costs money to restart, a lapsing contract right, an unstarted regulatory waiting period, and a condition needing a third party's signature. **8. b)** Lead time. None of those items is difficult; all of them require a person outside your building to act on their own schedule, and that elapsed time does not begin until you ask. **9. c)** Nobody owes the next action, which makes the file unowned rather than safe. Every other file on the board is waiting on somebody you can call. This one is waiting on a decision you have not noticed you need to make. **10. b)** Files where something is closing in and nothing is happening — quiet ≥ 3 business days *and* next irreversible date ≤ 5 days. Each filter alone is noisy; the intersection is the working set. **11. c)** A maximum interval after which a file receives an update even if nothing has happened. **12. b)** Milestones cluster where the file is active and disappear in the gaps. On the Linden Street file there were no milestones between day 33 and day 47, which is precisely the window in which it nearly died. The floor exists to make silence generate work. **13. b)** Loans funded divided by loans locked — and the denominator must always be stated, since shops measure over applications, locks, and submissions and get very different numbers from the same pipeline. **14. b)** Rates fall. The lender sized its forward sales on an expected pull-through; when rates fall, borrowers renegotiate or leave, actual pull-through drops, and the lender must buy back forward sales into a market where prices have risen. The asymmetry is the point. **15. b)** It appears as a success, because it funded. That is the chapter's sharpest warning about the metric: pull-through is a lagging measure that says nothing about a file that nearly died and did not. **16. b)** The calendar and the borrower relationship. The processor owns conditions, orders, and document flow; the loan officer owns dates and humans. That is why the weekly review has the LO reading the calendar and the processor reading the conditions. **17. c)** Arithmetic. "This is urgent" is an opinion; "the lock expires Wednesday, an extension is 0.250 point — \$914.38 — and the financing contingency lapses Friday" is a set of facts with a cost attached. **18. c)** 30 days after receiving a completed application. Regulation B also provides for a notice of incompleteness where the application is not complete. Requirements change — verify the current text with your compliance department. --- **19.** *Noise is safety:* a file that is making noise has somebody outside your head tracking it — an agent holding the contract calendar, a borrower auditing your progress, an underwriter issuing a work order. *Silence is risk:* a quiet file is one where nobody at all is holding state, including you, so nothing will surface until a date passes. **20.** (1) Genuinely complete and awaiting a scheduled event; (2) waiting on a third party who stopped working it and told nobody; (3) waiting on you, and you have forgotten. Only the first is benign. Your inbox cannot distinguish them because absence of email is absence of email — there is no message that says "nothing is happening here and that is a problem." **21.** | Stage | Days | Count | |---|---|---| | Lead → application | 0 → 5 | 5 | | Application → orders out | 5 → 7 | 2 | | Waiting on third parties | 7 → 19 | 12 | | Assembly → submission | 19 → 23 | 4 | | Underwriting turn | 23 → 28 | 5 | | Conditions | 28 → 47 | 19 | | Clear to close → funding | 47 → 51 | 4 | | **Total** | | **51** | 5 + 2 + 12 + 4 + 5 + 19 + 4 = 51. ✓ **22.** Day 33 (Monday): all nine prior-to-doc conditions cleared, file documentation-complete. Day 34 (Tuesday): clear to close, Closing Disclosure issued and received. Three business days — Wednesday day 35, Thursday day 36 — makes **Friday day 37** the earliest consummation. That is the identical count the file actually used (CD received Tuesday day 48, closing Friday day 51). (a) The lock expired day 42, so a day-37 closing sits **five days inside** it and no extension is needed. (b) The furniture was financed day 41, **four days after** that closing; the day-44 credit refresh never happens because the loan has already funded. (c) Day 37 is **eight days before** the contract's day-45 date, instead of six days after it. **23.** 0.250 point on \$365,750 = 0.0025 × \$365,750 = \$914.375, which is the frozen **\$914.38**. Across the fifteen days the extension bought: \$914.38 ÷ 15 = **\$60.96 per day**. As a fraction of the borrowers' original 0.500 discount point (\$1,828.75): exactly **one half**. It was lender-paid as a tolerance cure and did not touch the borrowers' cash to close, but it came out of the loan. **24.** More files produce slower responses; slower responses cause borrowers and agents to start checking in; that raises unplanned inbound; unplanned inbound consumes the time available for scheduled work; which makes responses slower still. Because it is a loop rather than a threshold, you do not reach a limit and stop — you cross it and accelerate, and the symptom presents as "I have no time," which sounds like a personal failing and is structural. **25.** *Credit fallout* (could not be approved), *competitive fallout* (borrower left for a better price), *transaction fallout* (the deal died and the loan was fine). The fourth cause is **the file nobody was watching** — expired rather than declined. It matters because it never appears as its own line: an expired lock that leads a borrower to leave gets recorded as competitive fallout, and a lapsed contingency gets recorded as transaction fallout. The pipeline-management failure is systematically miscategorized, which is exactly why it persists. **26.** The week you are too busy for the review is, by construction, the week your pipeline is largest and your unplanned inbound is highest — which is the week a file is most likely to slip. The review's value is concentrated entirely in the files you would not otherwise have thought about, and you cannot know in advance which those are, so a review that covers only what worries you is not a review at all.