CRU Credit Analysis & Risk Assessment 2

Question 1

A borrower has a 680 credit score, a 38% back-end DTI, and a 10% down payment on a conventional loan. Which factor most increases the layered risk?

Accepted Answer

Low down payment combined with borderline DTI

Answer

Layered risk occurs when multiple marginal factors combine; low down payment plus borderline DTI significantly elevates default probability.

Question 2

Under the FICO scoring model, which action by a borrower would most likely cause an immediate score improvement?

Accepted Answer

Paying down a revolving balance from 85% to 20% utilization

Answer

Credit utilization is highly weighted in FICO models, and reducing revolving balances sharply lowers utilization and boosts scores quickly.

Question 3

A non-traditional credit report (NTCR) is most appropriate for borrowers who:

Accepted Answer

Lack sufficient tradelines to generate a standard FICO score

Answer

NTCRs document payment history for rent, utilities, and insurance when a borrower has no scoreable credit file.

Question 4

Which credit event carries the longest standard waiting period before a borrower is eligible for a new conventional conforming mortgage?

Accepted Answer

Foreclosure

Answer

Fannie Mae guidelines require a 7-year waiting period from the completion date of a foreclosure for a conventional loan.

Question 5

A mortgage underwriter notices a borrower's credit report shows a $500 collection account opened two years ago. Under standard Fannie Mae guidelines, this collection:

Accepted Answer

Does not need to be paid if the borrower has no other derogatory credit

Answer

Fannie Mae does not require payoff of isolated collection accounts; the underwriter evaluates the overall credit profile.

(CRU) Certified Residential Underwriter Practice Test

(CRU) Certified Residential Underwriter Practice Test

CRU Credit Analysis & Risk Assessment 2