SAFE Processing and Underwriting 2

Question 1

During loan processing, what does a Verification of Employment (VOE) confirm?

Accepted Answer

The borrower's current employment status and income

Answer

The borrower's credit score history

Answer

The property's appraised value

Answer

The borrower's rental payment history

Question 2

What is the purpose of the 4506-C form in mortgage underwriting?

Accepted Answer

To request tax transcripts from the IRS

Answer

To authorize a credit pull

Answer

To verify homeowner's insurance

Answer

To confirm the appraisal is ordered

Question 3

An underwriter issues a 'suspended' decision on a loan application. What does this mean?

Accepted Answer

More information is needed before a decision can be made

Answer

The loan is approved with conditions

Answer

The loan is permanently denied

Answer

The file is forwarded to a senior underwriter

Question 4

Which document establishes the chain of ownership for a property prior to the current sale?

Accepted Answer

Abstract of title

Answer

Title commitment

Answer

Survey

Answer

Deed of trust

Question 5

What DTI ratio component includes all monthly debt obligations plus the proposed housing payment?

Accepted Answer

Back-end ratio

Answer

Front-end ratio

Answer

Loan-to-value ratio

Answer

Housing expense ratio

Question 6

A borrower receives rental income from an investment property. How many years of rental income history do underwriters typically require?

Accepted Answer

2 years

Answer

6 months

Answer

1 year

Answer

3 years

Question 7

What is 'layering of risk' in mortgage underwriting?

Accepted Answer

When multiple risk factors exist simultaneously on one loan file

Answer

Combining multiple loan products into one

Answer

The presence of several compensating factors

Answer

Using both automated and manual underwriting