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

IRS Form 4506-C (Request for Copy of Tax Return Transcript) allows the lender to obtain tax transcripts directly from the IRS to verify borrower-reported income.

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

Agency guidelines allow 75% of the gross rental income to offset the PITIA if it exceeds that payment, reducing or eliminating the net rental obligation.

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

One-time or non-recurring income such as an insurance settlement is not considered stable and cannot be used for qualifying purposes.

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

Overtime income with a documented two-year history may be averaged and added to base qualifying income per agency guidelines.

Question 5

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

Accepted Answer

Within 10 business days before loan closing

Answer

A VVOE is generally required within 10 business days before closing to confirm the borrower is still employed and the income source is valid.

(CRU) Certified Residential Underwriter Practice Test

(CRU) Certified Residential Underwriter Practice Test

CRU Income & Employment Verification 2