CMP - Certified Mortgage Processor Underwriting and Quality Control Questions and Answers

Question 1

A loan file submitted to Fannie Mae's Desktop Underwriter (DU) returns a finding of "Approve/Ineligible." What is the most likely reason for this result?

Accepted Answer

The borrower meets credit and income requirements, but a specific loan parameter does not comply with Fannie Mae's eligibility rules.

Answer

An "Approve/Ineligible" finding means the borrower's risk profile (credit, income, assets) is acceptable, but some aspect of the loan itself (like exceeding the conforming loan limit, or an unacceptable loan purpose) makes it ineligible for purchase by Fannie Mae. The underwriter must address the ineligibility factor.

Question 2

What is the primary purpose of a pre-funding Quality Control (QC) audit in the mortgage lending process?

Accepted Answer

To verify the accuracy and integrity of key loan data before the loan is funded.

Answer

Pre-funding QC is a crucial, proactive step to catch errors, miscalculations, or potential fraud *before* the lender's money is disbursed. It confirms that the loan was underwritten to guidelines and that the data is accurate, protecting the lender from funding a fraudulent or non-compliant loan.

Question 3

When manually underwriting a conventional loan for a borrower with a slightly high debt-to-income (DTI) ratio, which of the following would be considered the strongest compensating factor?

Accepted Answer

The borrower has significant cash reserves (e.g., 12 months of PITI) remaining after closing.

Answer

Compensating factors are positive aspects of a loan file that can offset a weaker area, like a high DTI. Significant post-closing reserves demonstrate the borrower's ability to withstand financial setbacks and continue making mortgage payments, which is a powerful mitigating factor. The other options are negative or neutral, not positive compensating factors.

Question 4

A processor is reviewing a credit report for a borrower applying for an FHA loan. The report shows a Chapter 7 bankruptcy that was discharged 18 months ago. The borrower has since re-established a clean credit history. Based on standard FHA guidelines, what is the status of this loan?

Accepted Answer

The loan is ineligible because FHA guidelines require a minimum of 2 years after a Chapter 7 discharge.

Answer

Standard FHA guidelines require a minimum of two years to have passed since the discharge date of a Chapter 7 bankruptcy. Since only 18 months have passed and no extenuating circumstances are mentioned, the borrower does not yet meet the minimum waiting period.

Question 5

An underwriter issues a conditional approval that requires the borrower to provide an updated pay stub covering the last 30 days before loan documents can be drawn. This type of condition is best classified as a:

Accepted Answer

Prior-to-doc (PTD) condition.

Answer

A "prior-to-doc" (PTD) condition must be satisfied before the final loan documents (like the Note and Mortgage/Deed of Trust) can be prepared and sent to closing. An updated paystub is a classic example of a PTD condition, as it verifies the borrower's employment and income are still stable just before the closing process begins.

CMP - Certified Mortgage Processor Practice Test

CMP - Certified Mortgage Processor Practice Test

CMP - Certified Mortgage Processor Underwriting and Quality Control Questions and Answers