CRU Underwriting Decision-Making & Loan Approval 2

Question 1

A borrower's file shows a 12-month history of on-time payments but a prior 120-day late from 3 years ago. How should the underwriter handle this?

Accepted Answer

Consider the late as a major derogatory and require a written explanation

Answer

A 120-day late is a major derogatory event that requires a written explanation and compensating factors even when it falls outside the standard 24-month window.

Question 2

Which of the following is considered an acceptable source of funds for a down payment under conventional guidelines?

Accepted Answer

A documented withdrawal from a retirement account

Answer

Documented withdrawals from retirement accounts are an acceptable source of down payment funds under Fannie Mae and Freddie Mac guidelines.

Question 3

An underwriter is reviewing a self-employed borrower who shows $80,000 in net income on Schedule C but added back $15,000 in depreciation. What is the qualifying income?

Accepted Answer

$95,000

Answer

Depreciation is a non-cash deduction and must be added back to Schedule C net income, yielding $80,000 + $15,000 = $95,000.

Question 4

Under FNMA guidelines, what is the maximum seller concession allowed on a primary residence purchase with an 85% LTV?

Accepted Answer

6%

Answer

Fannie Mae allows seller concessions up to 6% of the sales price for primary residence loans with LTV above 75% and up to 90%.

Question 5

A borrower has $500 in monthly student loan payments currently in deferment. How must the underwriter treat this debt for FHA loans?

Accepted Answer

Use 1% of the outstanding balance as the monthly obligation

Answer

FHA guidelines require the underwriter to use 1% of the outstanding student loan balance as the monthly payment when the loan is in deferment.

(CRU) Certified Residential Underwriter Practice Test

(CRU) Certified Residential Underwriter Practice Test

CRU Underwriting Decision-Making & Loan Approval 2