CMA - Certified Mortgage Advisor Underwriting and Risk Assessment Questions and Answers

Question 1

An underwriter is evaluating a loan application using the 'Three C's' of underwriting. Which of the following best represents the 'Capacity' component?

Accepted Answer

The borrower's debt-to-income ratio and employment stability.

Answer

The borrower's consistent payment history on previous debts.

Answer

The appraised value of the property being used as security for the loan.

Answer

The amount of cash the borrower has for a down payment and closing costs.

Question 2

A prospective homebuyer is purchasing a property for $400,000 and the property appraises for $410,000. They are seeking a loan for $320,000. What is the Loan-to-Value (LTV) ratio for this transaction?

Accepted Answer

80%

Answer

78%

Answer

82%

Answer

95%

Question 3

Which of the following is a primary function of an Automated Underwriting System (AUS) like Fannie Mae's Desktop Underwriter (DU) or Freddie Mac's Loan Product Advisor (LP)?

Accepted Answer

To provide an initial recommendation based on a loan application's alignment with investor guidelines.

Answer

To issue a final, legally binding loan approval without human review.

Answer

To physically inspect the collateral property and confirm its condition.

Answer

To negotiate the interest rate and loan terms directly with the borrower.

Question 4

A mortgage advisor is reviewing a client's tri-merge credit report. The scores are 720 (Equifax), 745 (Experian), and 715 (TransUnion). For conventional loan underwriting purposes, which score will typically be used?

Accepted Answer

The middle score (720)

Answer

The highest score (745)

Answer

The lowest score (715)

Answer

The average of the three scores (726.67)

Question 5

A borrower has a gross monthly income of $8,000. Their proposed monthly housing expense (PITI) is $2,400. They also have a $500 monthly car payment and a $300 monthly student loan payment. What is the borrower's back-end debt-to-income (DTI) ratio?

Accepted Answer

40%

Answer

30%

Answer

36%

Answer

45%

Question 6

During a manual underwriting review, an underwriter notes several 'compensating factors.' What is the purpose of identifying these factors?

Accepted Answer

To offset weaknesses in a loan file and justify an approval for a loan that is a borderline case.

Answer

To justify a higher interest rate for a low-risk borrower.

Answer

To automatically override a 'Refer' finding from an Automated Underwriting System (AUS).

Answer

To increase the loan amount beyond what the borrower originally requested.