Residential Mortgage Products & Guidelines Flashcards
7 cards from real CRU practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Residential Mortgage Products & Guidelines flashcards as text
An underwriter reviewing a 203(k) Limited loan sees the contractor's bid for repairs totals $38,000. What action should the underwriter take?
Answer: Decline because 203(k) Limited loans cannot exceed $35,000 in renovation costs
FHA 203(k) Limited (Streamlined) loans cap eligible rehabilitation costs at $35,000; a $38,000 bid exceeds this limit and would require the Standard 203(k) program.
Under Fannie Mae's guidelines, a loan is considered a 'delayed financing' exception when the borrower:
Answer: Paid cash for a property and seeks to obtain a mortgage within 6 months of purchase
Delayed financing allows borrowers who purchased a property with cash to obtain a cash-out refinance within 6 months of the closing date, up to the original purchase price.
For a conventional loan on a second home, the minimum down payment required by Fannie Mae is:
Answer: 10%
Fannie Mae requires a minimum 10% down payment (90% LTV) for second home purchases under standard guidelines.
A lender offers a Lender-Paid Mortgage Insurance (LPMI) product. The trade-off for the borrower compared to borrower-paid MI is:
Answer: A higher interest rate but no separate monthly MI payment that can be later cancelled
LPMI eliminates a separate monthly MI payment but is compensated through a higher note rate, which cannot be removed when LTV reaches 80% unlike borrower-paid MI.
Which index is most commonly used for adjustable-rate mortgages following the phase-out of LIBOR?
Answer: SOFR (Secured Overnight Financing Rate)
SOFR has become the primary replacement index for LIBOR-based ARMs following the LIBOR phase-out, and is now widely adopted by Fannie Mae and Freddie Mac.
A borrower applies for a VA IRRRL (Interest Rate Reduction Refinance Loan). Which of the following is a requirement specific to this product?
Answer: The loan must reduce the borrower's monthly payment or move from an ARM to a fixed rate
The VA IRRRL must result in a lower interest rate (or move from an ARM to a fixed rate), and reduced monthly payment to benefit the veteran.
Under the Ability-to-Repay (ATR) rule, which of the following loan categories is automatically presumed to comply with ATR requirements?
Answer: A Qualified Mortgage (QM)
Qualified Mortgages (QMs) receive a safe harbor or rebuttable presumption of ATR compliance under the CFPB's rules implementing Dodd-Frank.