CHCP Mortgage Processing & Underwriting 2

Question 1

A borrower's debt-to-income (DTI) ratio is calculated by dividing monthly debt payments by which figure?

Accepted Answer

Gross monthly income before taxes

Answer

DTI is calculated using gross monthly income (before taxes and deductions) as the denominator.

Question 2

Which automated underwriting system (AUS) is primarily used by Fannie Mae?

Accepted Answer

Desktop Underwriter (DU)

Answer

Fannie Mae's proprietary AUS is Desktop Underwriter (DU), while Freddie Mac uses Loan Product Advisor (LPA).

Question 3

What is the maximum conventional loan DTI ratio typically allowed under Fannie Mae guidelines with strong compensating factors?

Accepted Answer

50%

Answer

Fannie Mae's DU can approve loans up to 50% DTI when strong compensating factors such as high credit score or significant reserves are present.

Question 4

A gift letter for a down payment must confirm that the funds are a gift and NOT a loan — what additional element is required?

Accepted Answer

A statement that no repayment is expected

Answer

Gift letters must explicitly state that no repayment is expected or required, distinguishing the funds from a loan.

Question 5

When a lender orders a 'verbal verification of employment' (VVOE), when must it typically be completed?

Accepted Answer

Within 3 business days of closing

Answer

Fannie Mae and Freddie Mac require VVOE to be completed within 3 business days of the note date (closing).

(CHCP) Certified Home Closing Professional Practice Test