CRU Underwriting Decision-Making & Loan Approval 4

Question 1

A borrower is purchasing a second home and wants to finance 90% of the purchase price. Which statement is correct under conventional guidelines?

Accepted Answer

Second home purchases are allowed up to 90% LTV under standard FNMA guidelines

Answer

Fannie Mae allows up to 90% LTV on second home purchases, though mortgage insurance is required above 80% LTV.

Question 2

When evaluating an automated underwriting system (AUS) finding of 'Refer/Eligible', what is the underwriter's correct course of action?

Accepted Answer

Manually underwrite the loan following agency manual underwriting guidelines

Answer

A Refer/Eligible finding means the AUS could not approve the loan but it may be eligible if manually underwritten to agency guidelines.

Question 3

Which of the following income types requires a 2-year history AND a likelihood of continuance to be included in qualifying income?

Accepted Answer

Overtime and part-time income

Answer

Overtime and part-time income require a documented 2-year history and reasonable expectation of continuance before they may be used for qualification.

Question 4

An underwriter notes that the borrower's bank statements show large, unexplained deposits in the 60 days before application. What is the required action?

Accepted Answer

Require the borrower to document and source all large deposits

Answer

Agency guidelines require borrowers to document and provide a paper trail for large, unexplained deposits appearing in bank statements used for asset verification.

Question 5

What is the maximum allowable DTI for a manually underwritten FHA loan with no compensating factors?

Accepted Answer

31% / 43%

Answer

FHA manual underwriting without compensating factors limits front-end DTI to 31% and back-end DTI to 43%.

(CRU) Certified Residential Underwriter Practice Test

(CRU) Certified Residential Underwriter Practice Test

CRU Underwriting Decision-Making & Loan Approval 4