CRU Underwriting Decision-Making & Loan Approval 3

Question 1

An appraisal comes in $10,000 below the purchase price on a conventional loan. What is the underwriter's most appropriate action?

Accepted Answer

Base the LTV on the appraised value and re-evaluate eligibility

Answer

Conventional guidelines require LTV to be calculated on the lower of appraised value or purchase price, so the underwriter must recalculate eligibility.

Question 2

Which condition would most likely trigger a referral to a fraud investigation unit during underwriting?

Accepted Answer

Inconsistent employment dates on the application versus the verification of employment

Answer

Inconsistent employment dates between the application and VOE are a red flag for misrepresentation and a hallmark fraud indicator.

Question 3

A borrower's total monthly obligations are $2,200 and gross monthly income is $6,500. What is their back-end DTI?

Accepted Answer

34%

Answer

Back-end DTI = $2,200 / $6,500 = 33.85%, which rounds to approximately 34%.

Question 4

Under Fannie Mae guidelines, what minimum reserve requirement applies after closing for a borrower purchasing a primary residence with a fixed-rate mortgage?

Accepted Answer

No reserves required

Answer

Fannie Mae does not mandate post-closing reserves for a primary residence fixed-rate purchase, though higher-risk loans may trigger DU reserve requirements.

Question 5

Which of the following best describes a 'suspended' underwriting decision?

Accepted Answer

The underwriter cannot make a decision because critical information is missing or unverifiable

Answer

A suspended decision means the underwriter lacks sufficient information to approve or deny and the file must be updated before a determination can be made.

(CRU) Certified Residential Underwriter Practice Test

(CRU) Certified Residential Underwriter Practice Test

CRU Underwriting Decision-Making & Loan Approval 3