Practice Test Geeks(CMC) Certified Mortgage Consultant Practice Test
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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. What is the maximum back-end DTI ratio generally permitted under standard Fannie Mae guidelines without compensating factors?

    Answer: 45%

    Fannie Mae's standard maximum back-end DTI is 45% when run through DU without additional risk factors.

  2. Which of the following is considered an acceptable source of gift funds for a conventional loan down payment?

    Answer: A relative by blood, marriage, or adoption

    Fannie Mae permits gift funds from relatives related by blood, marriage, or adoption for conventional down payments.

  3. Under VA loan guidelines, what is the purpose of the VA Funding Fee?

    Answer: To help offset the cost of the VA loan guaranty program for taxpayers

    The VA Funding Fee reduces the burden on taxpayers by helping sustain the VA home loan guaranty program.

  4. A borrower received a $10,000 cash deposit into their bank account two months ago with no documentation. How should an underwriter handle this?

    Answer: Require a written explanation and supporting documentation for the source of funds

    Underwriters must source all large deposits to ensure funds are not borrowed and are eligible for use in the transaction.

  5. What is a 'layered risk' scenario in mortgage underwriting?

    Answer: Multiple risk factors present in one file, such as low credit score combined with high LTV and high DTI

    Layered risk refers to the combination of several individual risk factors that together increase the likelihood of default.

  6. For a USDA Guaranteed Rural Housing loan, what is the maximum allowable income limit based on?

    Answer: 115% of the area median income for the household size

    USDA Guaranteed loans are limited to households earning no more than 115% of the applicable area median income.

  7. An underwriter issues a conditional approval. What does this mean?

    Answer: The loan is approved pending satisfaction of specific outstanding conditions

    A conditional approval means the underwriter approves the loan subject to the borrower or processor fulfilling defined outstanding items.