Manual Underwriting
Which of the following loan programs and/or types must be submitted through one of the agencies' automated underwriting systems? Expanded approval - Levels I-III Affordable Merit Rate mortgages Converted or modified mortgages Seasoned mortgages
Not C
Which of the following recommendations from DU requires further underwriter analysis through a manual review? Approve/Ineligible Expanded Approval - Level III Caution with A-minus Eligibility Caution
Not D
Which step in the comprehensive risk assessment asks underwriters to consider the layering of risk against primary risk factors? Evaluate contributory risk Determine comprehensive risk Determine default risk Evaluate primary risk
A
Select two. Your loan submission to LPA resulted in a Caution risk classification, not A-minus eligible. The applicants indicate the source of the down payment as a diamond wristwatch valued at $12,000. Total funds needed to close is $17,825. Two months' bank statements in the file verify liquid assets as $9,324. At a minimum, what additional documentation is needed for delivery to Freddie Mac? Bill of sale No additional documentation is necessary Appraisal of wrist watch Proof of receipt of the proceeds
A & D
elect two. Which of the following factors may be considered to offset risks in a Caution loan processed by LPA but not eligible as an A-minus? Potential income increases for borrowers with higher levels of education, training, or experience Strong underwriting scores Qualifying ratios below the agency standards exemplify a borrower who does not utilize debt to finance luxuries or necessities and typically demonstrates substantial savings Verified rent paid by related persons living in the house but not used in qualifying income
A & D
Select three. If a loan is evaluated using LPA and receives a risk recommendation of Caution (not A-minus eligible), the analysis of the loan includes what three steps? Evaluate the credit, capacity, and collateral. Obtain a second appraisal report on the property (collateral). Evaluate the file for additional risk layers while identifying offsetting (or compensating) factors not previously evaluated by the AUS. Review LPA results carefully using risk factors identified in the Credit Risk Comments and Repository Reason Code Comments sections.
A, C, D
Freddie Mac recommends the underwriter provide a rationale when exceeding the guidelines for: Reserves Housing expense-to-income, DTI, and gap ratios Number of borrowers on a loan Income and/or assets
B
Which of the following loan programs generally may NOT be underwritten manually for either Fannie Mae or Freddie Mac? Affordable mortgage loans Manufactured home loans Investment property loans Expanded Approval Level IV loans
B
elect three. Rental income documentation must include: W-2 earnings statement IRS Form 4506-T Most current year's tax return Copy of signed lease agreement if property, where applicable
B, C, D
Both Fannie Mae and Freddie Mac require manual underwriting on a loan that has a note date that is more than how many months from the delivery date? 3 6 9 12
D
The initial risk of Bart and Rita's refinance application has been assessed to be moderate based upon a 700 representative credit score and a verified LTV/CLTV of 85%. Upon closer review of the borrower application and initial disclosures, Bart and Rita have 16 months' cash reserves. With no other risk factors present, what is the impact of the reserves on the comprehensive risk assessment? Increase overall risk None - there is no impact to overall risk assessment Significantly decrease risk Decrease overall risk
D
Which of the following does Freddie Mac consider a benchmark measure of capacity? Housing debt-to-income ratio of 36% with a non-occupant co-borrower Housing debt-to-income ratio of 35% Loan-to-value ratio maximum of 75% Debt-to-income ratio maximum of 45% in most cases
D
According to Freddie Mac, a two- to four-unit subject property pledged as security for a mortgage loan adds additional risk of mortgage default. True False
True
