Mortgage Loan Originator Loan Underwriting and Processing 2

Question 1

Which of the following income types is typically considered 'stable' for mortgage qualification?

Accepted Answer

Two-year history of self-employment income

Answer

Self-employment income with a two-year history is considered stable income; lenders average the two years to determine qualifying income.

Question 2

What is the purpose of a Verification of Employment (VOE) in the loan process?

Accepted Answer

To confirm the borrower's current employment status, position, and income

Answer

A VOE is sent to the employer to independently verify the borrower's employment status, title, start date, and income details.

Question 3

In underwriting, a 'layered risk' scenario means:

Accepted Answer

Multiple risk factors are present simultaneously, increasing overall loan risk

Answer

Layered risk occurs when multiple risk factors (e.g., low credit score + high LTV + minimal reserves) combine, making the loan riskier than any single factor alone.

Question 4

What document is used to verify a borrower's income from wages and is issued by employers annually?

Accepted Answer

W-2

Answer

The W-2 form, issued by employers, reports wages and withholdings and is used by underwriters to verify a salaried borrower's annual income.

Question 5

When qualifying a borrower using rental income, lenders typically use what percentage of gross rental income?

Accepted Answer

75%

Answer

Most conventional guidelines allow 75% of gross rental income to account for vacancy and maintenance expenses when qualifying borrowers.

Mortgage Loan Originator Practice Test

Mortgage Loan Originator Practice Test

Mortgage Loan Originator Loan Underwriting and Processing 2