CMC Loan Processing and Underwriting Guidelines 3

Question 1

What is the maximum back-end DTI ratio generally permitted under standard Fannie Mae guidelines without compensating factors?

Accepted Answer

45%

Answer

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

Question 2

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

Accepted Answer

A relative by blood, marriage, or adoption

Answer

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

Question 3

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

Accepted Answer

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

Answer

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

Question 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?

Accepted Answer

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

Answer

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

Question 5

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

Accepted Answer

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

Answer

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

(CMC) Certified Mortgage Consultant Practice Test