CRU Income & Employment Verification 2

Question 1

What IRS form does an underwriter typically use to verify a borrower's reported income directly with the IRS?

Accepted Answer

Form 4506-C

Answer

Form 1099

Answer

Form W-9

Answer

Form 8821

Question 2

A borrower receives rental income from an investment property. When is rental income from a subject property eligible to offset the mortgage payment?

Accepted Answer

When 75% of the gross rents exceed the PITIA of the subject property

Answer

Immediately, as long as a lease agreement exists

Answer

Only after two years of documented rental history on tax returns

Answer

When the borrower has managed rental properties for at least one year

Question 3

Which of the following income types is NOT typically stable enough to include in qualifying income under standard agency guidelines?

Accepted Answer

A one-time insurance settlement payment

Answer

Part-time employment income with a two-year history

Answer

Social Security retirement benefits

Answer

Long-term disability benefits

Question 4

For a borrower with a two-year history of overtime income, the underwriter should:

Accepted Answer

Average the overtime over two years and add it to base income

Answer

Exclude overtime because it is not guaranteed

Answer

Use only the current year's overtime to be conservative

Answer

Apply a 25% reduction to overtime before including it

Question 5

A verbal verification of employment (VVOE) is typically required:

Accepted Answer

Within 10 business days before loan closing

Answer

At application, before processing begins

Answer

At underwriting, to confirm current employment status

Answer

After the appraisal is ordered

Question 6

When analyzing self-employed borrower income using Schedule C (sole proprietor), the underwriter adds back which of the following to net profit?

Accepted Answer

Depreciation and depletion deductions

Answer

Health insurance premiums paid by the employer

Answer

Cost of goods sold (COGS)

Answer

Estimated tax payments

Question 7

A borrower receives child support income. What documentation is required to use it for qualification?

Accepted Answer

Court order or divorce decree plus 12 months of receipt history

Answer

A signed affidavit from the paying party confirming future payments

Answer

One bank statement showing a child support deposit

Answer

Child support income can never be used for mortgage qualification