Mortgage Mortgage Underwriting and Qualification Questions and Answers 3

Question 1

What is an Automated Underwriting System (AUS), and which two systems are most commonly used in the U.S.?

Accepted Answer

A computer system that evaluates loan risk — Desktop Underwriter (DU) and Loan Prospector (LP)

Answer

A manual review checklist — FICO Score and VantageScore

Answer

A government database — CAIVRS and MERS

Answer

A credit monitoring tool — Experian and TransUnion

Question 2

During mortgage underwriting, what is the significance of a borrower receiving a 'Refer with Caution' finding from an AUS?

Accepted Answer

The loan has significant risk factors and is unlikely to be approved without major compensating factors

Answer

The loan is automatically approved with conditions

Answer

The borrower needs to provide one additional document

Answer

The interest rate will be slightly higher than standard

Question 3

Which of the following liabilities must an underwriter include in the DTI calculation even if the borrower is not the primary payer?

Accepted Answer

A cosigned auto loan where the borrower is legally obligated

Answer

Utility bills paid monthly

Answer

Groceries and household expenses

Answer

Health insurance premiums deducted from a paycheck

Question 4

What does the term 'trailing spouse income' refer to in mortgage qualification?

Accepted Answer

Income from a spouse who is relocating and has not yet secured employment in the new area

Answer

Income from a divorced former spouse via alimony

Answer

Passive investment income earned by the non-borrowing spouse

Answer

Retirement income from a spouse who recently stopped working

Question 5

In FHA underwriting, what is the minimum credit score required to qualify for the 3.5% down payment option?

Accepted Answer

580

Answer

500

Answer

620

Answer

640

Question 6

What is the underwriter's primary concern when reviewing a borrower's bank statements and finding large unexplained deposits?

Accepted Answer

The deposits could represent undisclosed borrowed funds that affect the borrower's true debt obligations

Answer

The borrower may be earning too much income to qualify

Answer

The bank may have made accounting errors

Answer

The borrower might be planning to pay off the mortgage early