Mortgage Underwriting Principles 4

Question 1

What is the maximum seller concession allowed on a conventional loan with an LTV of 75%?

Accepted Answer

9%

Answer

3%

Answer

4%

Answer

6%

Question 2

An FHA loan requires a minimum credit score of 580 for maximum financing. What down payment does this correspond to?

Accepted Answer

3.5%

Answer

0%

Answer

3%

Answer

5%

Question 3

When underwriting an investment property, how is rental income from the subject property typically treated for qualification?

Accepted Answer

75% of market rent is used, offsetting the PITI payment

Answer

100% of market rent is added to income

Answer

Rental income is never counted on investment properties

Answer

Rental income is counted only if the borrower has a landlord history

Question 4

Which underwriting red flag would most likely trigger a fraud investigation?

Accepted Answer

Inflated purchase price with large seller concessions concealing a kickback

Answer

A borrower with two rental properties

Answer

A high credit score with low income

Answer

A borrower changing jobs within the same field

Question 5

A borrower's credit report shows a collection account for $800. Under most conventional guidelines, what is required?

Accepted Answer

Medical collections are generally excluded from DTI calculation

Answer

The collection must be paid before closing in all cases

Answer

Collections over $500 always require a 12-month payment history

Answer

The account must be disputed and removed from the report

Question 6

What is the key difference between a full documentation loan and an alternative documentation loan?

Accepted Answer

Full doc uses standard income verification; alt doc uses bank statements or asset depletion

Answer

Full doc loans are only for primary residences

Answer

Alt doc loans have lower interest rates

Answer

Full doc requires a higher down payment

Question 7

Under Regulation B (ECOA), an underwriter must notify an applicant of an adverse action within how many days of receiving a completed application?

Accepted Answer

30 days

Answer

7 days

Answer

15 days

Answer

60 days