CRU Exam 1

What factors must exist in order for seasonal unemployment income to be used as qualifying income?

- It must be clearly associated with seasonal layoffs - It must be expected to recur - It must be reported on the borrower's 1040

Select three. Which of the following statements are true regarding the underwriting of borrowers where 30% of their income is derived from commission?

- Minimum of two-year history is mandatory - Two years signed federal tax returns for most recent two-year period are required - Recent paystubs or VOE required Not: Non-reimbursed business expenses must be deducted from income

When reviewing the Sales Comparable Grid, a line adjustment of more than ___ may indicate that the comparable sale chosen may not actually be the best comparable.

10%

What does a price of 101 translate into

A premium paid by the borrower of 1 discount point

What are loans that are eligible for sale to the GSEs (Fannie Mae and Freddie Mac) called?

Agency eligible

What is the primary role of the GSEs, Fannie Mae and Freddie Mac?

Buy mortgages and create mortgage-backed securities

A borrower is delinquent on his mortgage and gives the property back to the lender. This is known as:

Deed-in-lieu

The document published by Fannie Mae that provides comprehensive LTV, CLTV, and HCLTV ratio requirements for manually underwritten loans is called the:

Eligibility Matrix

When interest rates are expected to fall, the value of a mortgage servicing portfolio will:

Fall

Which one of the following income types does NOT have to have a defined expiration date?

Foster care income

What is the risk of a change in value of the loans in a lender's warehouse as interest rates change called?

Interest rate risk

Select two. An operating income statement is required on:

Investment properties All 2-4 unit properties

Select all that apply. With respect to documentation and data integrity when underwriting a loan using an AUS, which of the following are considered critical when relying on the findings report?

LOS/AU data should be updated each time new documentation is received The underwriter can document logical explanations for red flags

Select three. If using full PITI on the rental properties in qualifying ratios, the underwriter should add back the following lines from Schedule E:

Line 16 - Taxes Line 12 - Mortgage interest paid to banks, etc. Line 9 - Insurance

What platform is used by secondary market participants to register and track loans?

MERS

A homeowner with a $95,000 existing mortgage wants to apply for a limited cash-out mortgage. The borrower would like a new loan amount of $98,500. Will this loan amount meet the requirements for a limited cash-out?

No

Which of the following pieces of information is not found on the Uniform Underwriting and Transmittal Summary?

Number of bedrooms

Select three. Schedule E includes income from:

Partnerships Rental properties Trusts

Income from a sole proprietorship can be found on what schedule or form of the tax return?

Schedule C

Which of the following laws defines the role of a mortgage loan originator

Secure and Fair Enforcement for Mortgage Licensing Act

Which of the following laws defines the role of a mortgage loan originator?

Secure and Fair Enforcement for Mortgage Licensing Act

Which is not one of the primary goals of the loan administration team?

Serving the needs of the loan production team

A borrower with an established credit history has recently started opening new charge accounts. What could this indicate?

She is over-extended

Which team in a mortgage banking operation is primarily responsible for insuring that the investor gets all the documentation necessary when a loan is sold?

Shipping

How should "Other Income or Loss" reported on Schedule C be addressed in Income Analysis Form 91?

Subtract the income or add the loss unless it is regular and recurring

The appraiser may provide the final appraised value on the URAR, noting that the value is subject to repairs or alterations.

True

Reserves are included in the Details of Transaction.

True*

The price that an investor offers for a best efforts delivery is ________ than/as for a mandatory delivery.

Worse

Select three. Which of the following self-employed guidelines are typical for most investors?

- Self-employed borrowers are usually asked to supply two years of personal returns as well as business federal income tax returns for the most recent two-year period - A self-employed borrower is someone who has a 25% or greater ownership in a business - Self-employed borrowers should have a two-year history of running their own business in order for the income to be used in qualifying

Select all that apply. MISMO's workgroups represent all sectors of the residential and commercial industry. Which of the following are included?

-Credit reporting agencies -Technology vendors -Originators -Lenders

Select two. Which of the following are liquidation loss mitigation options that require the borrower to forfeit ownership of the property in return for a full or partial forgiveness of the remaining unpaid debt?

-Deed-in-lieu -Short sale

Select all that apply. An Excessive Value with Valuation Risk message from Desktop Underwriter (DU) alerts the lender that there is a risk of:

-Inflated value -Unsuitable comparables used -The appraiser not being qualified to project appraisal values accurately -Excessive value for the local market 1,4*

Select all that apply. Which of the following statements are true with respect to a Single Family Residential Appraisal?

-It must contain an impartial opinion of value that is supported and justified. -It contains Information and analysis supporting the appraiser's opinions and conclusions pertaining to value and marketability. -It must be completed by an independent, licensed, and experienced appraiser.

Select all that apply. Which of the following fields can be used to search for a loan in Loan Product Advisor (LPA)?

-Property Address -AUS Transaction Number -Borrower Last name -Fannie Mae ID All

Select all that apply. The Desktop Underwriter (DU) underwriting findings report specifies the following information related to assets

-Reserves required to be verified* -Total funds to be verified for the transaction*

Servicers are required to respond to a borrower's qualified written request for information within:

30 business days of the request

On a borrower's credit report, the "amount owed" relative to the total existing available credit represents roughly what percentage of the final credit score?

30%

A borrower is purchasing a three-family, owner-occupied rental property. Rental income will be $2,000 (verified only by leases). The PITIA on the property is $2,350. The borrower has a gross monthly income of $5,760 and monthly debt payments of $625. What are the ratios for this loan?

32/41

Calculate the total debt-to-income (DTI) ratio using the following: $1,350 PITIA $300 car payment $200 utility payment $4,000 gross monthly income

41% (don't include utility)

A borrower's gross monthly income is $7,600. The new mortgage payment is $2,700, with additional monthly debt of $600. What is the DTI ratio?

43%

The loan you are reviewing has an appraised value of $275,000. The loan amount is $123,000 and there is a second mortgage of $33,000. What is the LTV/CLTV for this loan?

45/57

Select two. What is important to look for in non-traditional credit references?

A 12-month history of on-time payments Required monthly payments

Select two. Which of the following characteristics disqualify a property for traditional residential mortgage financing?

A fully operational business on the property A high-rise condominium

If a borrower has been self-employed for at least a year but less than two years, the income may be considered if there is proof of product acceptance in the marketplace, the borrower has a two-year history of same or greater earnings in a similar occupation, and:

A projected profit and loss statement is provided.

Select two. Unless otherwise indicated by the automated underwriting findings report, which of the following documents are used to verify salaried income?

A verification of employment (VOE) W-2s covering the most recent 2-year period

Select all that apply. Which of the following mortgage types can be submitted to Desktop Underwriter (DU)?

ALL

Joe Jackson owns 49% of the stock for a company by the name of Action Jackson Heroes. He is also the CEO and is paid $156,000 annually in salary, supported by a W-2. When using Form 91, what adjustment, if any, would you make on Line 1 of the form?

Add $156,000

Schedule F is showing a CCC payment of $8,765, of which $5,000 was taxable. What adjustment should be made to Income Analysis Form 91?

Add $3,765

As a general rule, capital loss carryovers should be:

Added back to capital loss/gains if those gains/losses are regular and recurring

Select all that apply. For 2-4 unit condominium projects, which of the following requirements must be met for delivery to Freddie Mac?

All units and common elements are complete. No single entity owns more than one unit in the project. All units in the project are conveyed to qualified purchasers who are owner occupants.

An applicant lists no other real estate owned on her mortgage application, yet she has taken deductions for both real estate taxes and mortgage interest on her tax return. You should:

Ask for an explanation from the borrower along with supporting documentation.

A borrower has a three-year history of overtime, verified by W-2s and a VOE. The overtime income has risen slightly over the last three years. The remainder of the file is strong, with a good credit score and all other eligibility issues met. How would you calculate the overtime income, unless otherwise stipulated by the AUS findings?

Average the last two years' overtime

Select all that apply. Which of the following are required by Fannie Mae and Freddie Mac for all self-employed borrowers?

Borrowers personal tax Returns Form 4506-T Not analysis of personal income or verbal verification from third party

Which organization is the most aggressive in tracking consumer complaints and the ultimate disposition of those complaints?

CFPB

A borrower has a 41% DTI ratio. If present in the loan file, which of the following could be used as a compensating factor to offset the DTI ratio?

Cash reserves Established ability to pay at higher DTI ratios Verified income not used in qualifying

When an appraiser adjusts the comparable properties as a dollar value, these adjustments are known as:

Comparable adjustments

What is an entity that issues mortgage-backed securities backed by mortgages originated by other lenders called?

Conduit

Overtime, bonus, and commission are examples of variable income. Which of the following factors are critical when assessing this type of income?

Confirming an upward trend

For loans submitted to Desktop Underwriter (DU), a project review will be required for all of the following project types EXCEPT:

Detached PUD

An underwriter reviews eligibility issues primarily to:

Determine whether the loan meets investor requirements

A borrower's income has decreased slightly. Prior to this verified decrease, the borrower had a debt ratio of 35%. This loan needs to be resubmitted to Loan Product Advisor (LPA).

False

Billy Borrower needs to sell his current home prior to closing on his new residence, but his current home has not yet sold. You should calculate the estimated proceeds by subtracting the sales price from the mortgage.

False

Cash proceeds from a cash out refinance transaction are an acceptable source of liquid reserves.

False

The opportunity to utilize streamlined appraisal is lost if the lender fails to submit an accurate address for the subject property to Desktop Underwriter (DU).

False*

Prior to the existence of the secondary market, mortgage terms were often

High interest rate fixed-rate mortgages

According to the definition of market value, what should an appraiser do if there are special or creative financing terms present for the subject property?

Ignore the concessions, proceed with the appraisal, and choose proper comps

Which of the following statements is FALSE regarding the ability-to-repay provision?

It is part of the Fair Credit Reporting Act.

If the interested party contribution is in the form of a sales concession, what needs to happen?

It needs to be deducted from the sales price, and the LTV needs to be recalculated using that sales price if it exceeds the maximum concession amount

Which team does the secondary marketing department work with to determine pricing strategies and develop new loan programs?

Loan Production

The loan-to-value (LTV) ratio for a purchase transaction is calculated using which of the following formulas?

Loan amount divided by the lesser of the appraised value or sales price

Generally speaking, mortgages made to borrowers that intend to make a property their primary residence represent a ________ risk compared to loans made to borrowers that intend to use a property as a second home.

Low

Select all that apply. Which of the following data elements are required by Loan Product Advisor (LPA) in order to perform an accurate collateral assessment?

Number of units Property type

Select three. When managing the pipeline, the secondary marketing team will do which of the following?

Obtain commitments on applications Generate sufficient production to meet objectives Hedge the pipeline for changes

Select two. To stay profitable, loan servicing portfolios must constantly be fed with new loans. This is primarily because:

Older loans may cost more money to service than they generate in servicing fees Newer loans generate more servicing fee income than older loans

A corporation's income is taxed:

On both personal and corporate rates

Choose the best possible answer. When reviewing a borrower's credit report, the underwriter notices that all accounts have been paid in full recently. The underwriter recognizes this as a red flag that could indicate a concern that the borrower has recently:

Opened a new, undisclosed consolidation loan

Typically, how does a mortgage banker fund its production?

Operating Capital

Of the loan products listed below, which represents the least risk to the lender?

Permanent buydown

The number one goal of hedging is to preserve the ________ of a loan at time of rate lock.

Price

Which of the teams within a mortgage banking operation are most heavily regulated?

Production

A profit and loss statement does which of the following?

Provides a snapshot of the income and expenses of a business during a calendar or fiscal year.

Which is not an element of a solid quality control program?

Random samplings of a minimum percentage of loans

If an appraisal is over 4 months old, what needs to be done?

Re-inspection of the interior and exterior of the home (1040D)

Select three. Which of the following are considered personal funds or other available funds for closing?

Retirement funds Gifts Stocks

What five-page document provides final details about the mortgage payment, costs, and terms of the loan including projected monthly payments, fees, and other costs related to closing?

The Closing Disclosure

Who is the primary regulator over the mortgage banking industry?

The Office of the Comptroller of Currency

Fannie Mae and Freddie Mac have specific tolerances for variations in income, assets, and property. For loans submitted through an AUS, if the data in the loan file changes (or was misentered), what needs to be done?

The data should be re-entered, and the loan should be resubmitted to the AUS only if it exceeds the tolerances.

Which ratio does an underwriter use to evaluate the borrower's ability to manage their liabilities, including the proposed mortgage payment?

The debt-to-income ratio

Select three. Which of the following statements are true regarding conforming loans?

The maximum loan amounts are set by the FHFA They can be sold to Fannie Mae and Freddie Mac There are considerations for high balance/cost loans

What is used for the collateral for a draw on a lender's warehouse line of credit?

The mortgage note

Which of the following is NOT an acceptable reason to use comps outside of the subject property neighborhood?

The sales prices in the subject neighborhood seem too low.

On the loan production team, whose responsibility is it to ensure that the borrower has the ability and willingness to repay the loan?

The underwriter

Who is generally responsible for re-running the automated underwriting engine findings report if information is received from third parties that is different from what was on the initial loan application?

The underwriter

An underwriter is reviewing an appraisal for a refinance transaction. The underwriter notices that the property, which is currently appraised for $150,000, sold six months ago for $100,000. Which of the following statements is true?

This difference in value within six months would not be acceptable under any circumstances.

If the minimum assessment feedback from Loan Product Advisor (LPA) requires a report with an estimate of value, then Form 2070 would not meet this requirement.

True

What is the common set of data elements required to deliver loans to the agencies (Fannie Mae and Freddie Mac) referred to as?

Uniform Loan Delivery Dataset (ULDD)

What do smaller independent mortgage bankers typically use to fund their mortgage loans prior to sale onto the secondary market?

Warehouse lines of credit

Select all that apply. For loans submitted to Desktop Underwriter (DU), a streamlined appraisal report for an interior and exterior inspection must include interior photographs of the following:

kitchen Example of recent updates, if applicable Examples of physical deterioration Main living area