Financial Assessment and Underwriting Flashcards
7 cards from real CRMP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Financial Assessment and Underwriting flashcards as text
Under HUD Mortgagee Letter 2014-21, which TWO unsatisfactory factors must BOTH be present to require a Fully-Funded LESA?
Answer: Unsatisfactory credit history AND insufficient residual income
A Fully-Funded LESA is required only when BOTH the borrower's credit history AND residual income are found to be unsatisfactory.
A borrower disputes a collection account on their credit report. During HECM financial assessment, the lender should:
Answer: Treat the disputed account according to HUD guidelines, which may still require evaluation
HUD requires lenders to evaluate disputed accounts and determine if they represent a pattern of credit disregard regardless of the dispute status.
For a borrower who is self-employed, which income figure is used in the HECM financial assessment?
Answer: Net self-employment income from Schedule C averaged over two years
Net self-employment income from Schedule C is averaged over two years to determine a stable monthly income figure for FA purposes.
A HECM borrower has satisfactory credit but residual income that is $75 below the HUD threshold. What type of LESA is typically required?
Answer: A Partially-Funded LESA
A Partially-Funded LESA is required when credit is satisfactory but residual income alone falls short of the HUD threshold.
Which of the following is considered a 'satisfactory' credit history outcome in HECM financial assessment?
Answer: No late mortgage payments in the past 24 months and no more than two 30-day late installment payments in the past 12 months
HUD's satisfactory credit standard allows up to two 30-day late installment payments in 12 months if the mortgage history is clean for 24 months.
When a non-borrowing spouse exists on a HECM, how does financial assessment treat their income?
Answer: Their income may be included as effective income if it is available to pay property charges
Income from a non-borrowing spouse may be counted as effective income if it is consistently available to the borrower for meeting obligations.
A borrower has a delinquent property tax obligation that was paid off three months ago. How should the lender treat this during financial assessment?
Answer: Document the delinquency, evaluate the reason, and consider compensating factors
A resolved delinquency must be documented and evaluated in the context of overall credit history and any compensating factors.