Practice Test Geeks(CMC) Certified Mortgage Consultant Practice Test
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Loan Processing and Underwriting Guidelines Flashcards

7 cards from real CMC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Loan Processing and Underwriting Guidelines flashcards as text

  1. Which automated underwriting system is used primarily for FHA loans to assess risk?

    Answer: TOTAL Mortgage Scorecard

    FHA's Technology Open To Approved Lenders (TOTAL) Mortgage Scorecard is the AUS used to evaluate FHA loan risk.

  2. What document is used to verify a borrower's employment and income directly with the IRS?

    Answer: IRS Form 4506-C

    Form 4506-C authorizes the lender to obtain tax return transcripts directly from the IRS to verify income.

  3. A borrower has a Chapter 7 bankruptcy discharged 2.5 years ago and is applying for an FHA loan. What is the underwriter's likely decision?

    Answer: Eligible, since FHA requires only a 2-year waiting period post-discharge with re-established credit

    FHA guidelines allow borrowers to qualify after a Chapter 7 bankruptcy with a minimum 2-year waiting period from the discharge date.

  4. What is the maximum LTV for a cash-out refinance on a primary residence under standard Fannie Mae guidelines?

    Answer: 80%

    Fannie Mae limits cash-out refinances on primary residences to a maximum LTV of 80%.

  5. Which type of property is generally ineligible for conventional conforming financing due to ownership structure?

    Answer: Cooperative (co-op) apartment

    Co-op apartments involve ownership of shares in a corporation rather than real property, making them ineligible for standard conventional conforming loans.

  6. Under the ability-to-repay rule, what interest rate must lenders use to qualify a borrower on an adjustable-rate mortgage (ARM)?

    Answer: The fully indexed rate or the introductory rate plus 2%, whichever is higher

    ATR/QM rules require lenders to qualify ARM borrowers at the fully indexed rate or the start rate plus 2%, whichever produces a higher payment.

  7. What is the maximum number of financed properties a borrower can own and still be eligible for a Fannie Mae conventional loan?

    Answer: 10

    Fannie Mae allows borrowers to finance up to 10 properties, including their primary residence, under its multiple financed properties policy.