CHCP Mortgage Processing & Underwriting 5

Question 1

A borrower's income from a part-time job can typically be used for qualification if they have worked the part-time job for at least how long?

Accepted Answer

24 months

Answer

Most conventional guidelines require a 2-year history of part-time employment to use that income for qualification, demonstrating its consistency.

Question 2

What is the purpose of an 'appraisal review' or 'field review' ordered by the underwriter?

Accepted Answer

To verify the accuracy and methodology of the original appraisal

Answer

An appraisal review is a secondary evaluation to assess whether the original appraisal's value, methodology, and comparable sales are credible and supported.

Question 3

Which document is used to disclose the Annual Percentage Rate (APR) and loan terms to the borrower under TRID rules?

Accepted Answer

Loan Estimate

Answer

Under TRID (TILA-RESPA Integrated Disclosure), the Loan Estimate replaced both the GFE and early TIL disclosure and must be provided within 3 business days of application.

Question 4

In mortgage processing, what does a 'clear to close' (CTC) status mean?

Accepted Answer

All underwriting conditions have been satisfied and the loan is approved for closing

Answer

Clear to close means the underwriter has reviewed and approved all conditions, and the closing department can proceed to schedule and prepare closing documents.

Question 5

What is a 'non-arm's length transaction' in mortgage underwriting, and why does it matter?

Accepted Answer

A transaction between related parties, requiring additional scrutiny to prevent inflated values or undisclosed arrangements

Answer

Non-arm's length transactions involve related parties (family members, employer-employee) and require heightened underwriting review because the sale price may not reflect true market value.

(CHCP) Certified Home Closing Professional Practice Test

(CHCP) Certified Home Closing Professional Practice Test

CHCP Mortgage Processing & Underwriting 5