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Loan Processing and Underwriting Guidelines Flashcards

7 cards from real CMC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Loan Processing and Underwriting Guidelines flashcards as text

  1. Which document establishes the maximum allowable seller concessions for a conventional conforming loan with an LTV above 90%?

    Answer: Fannie Mae Selling Guide

    Fannie Mae's Selling Guide limits seller concessions to 3% for conventional loans with LTV above 90%.

  2. A borrower's pay stub shows year-to-date earnings of $42,000 through June. What is the underwriter's calculated monthly income?

    Answer: $7,000

    $42,000 divided by 6 months (January–June) equals $7,000 per month.

  3. Under Fannie Mae guidelines, how long must a borrower be self-employed before that income can be used for qualification?

    Answer: 2 years

    Fannie Mae requires a minimum two-year history of self-employment before the income can be considered stable and used for qualifying.

  4. What is the primary purpose of a 1008 Uniform Underwriting and Transmittal Summary?

    Answer: To summarize key loan data for underwriting review

    The 1008 form provides a concise summary of loan, property, and borrower information for the underwriter's decision.

  5. A borrower has a $500 monthly student loan currently in deferment. Under FHA guidelines, how should the underwriter treat this debt?

    Answer: Include 1% of the outstanding balance as a monthly payment

    FHA requires underwriters to use 1% of the outstanding student loan balance as the monthly obligation when the loan is deferred.

  6. Which type of income requires the underwriter to average earnings over a 24-month period rather than using current rates?

    Answer: Commission income exceeding 25% of total income

    When commission income exceeds 25% of total earnings, Fannie Mae requires a two-year average to account for its variable nature.

  7. An appraisal comes in $15,000 below the purchase price on a conventional loan. What is the underwriter's standard course of action?

    Answer: Base the loan on the appraised value, requiring the borrower to cover the difference

    Conventional underwriting guidelines require the loan amount to be based on the lesser of the purchase price or appraised value.