Credit Analysis & Risk Assessment Flashcards
7 cards from real CRU practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Credit Analysis & Risk Assessment flashcards as text
A borrower applies for a mortgage one year after a Chapter 13 bankruptcy that was discharged. Which loan type would allow the shortest waiting period with trustee approval?
Answer: FHA loan with documented re-established credit
FHA guidelines allow a borrower to apply just 1 year after Chapter 13 discharge with trustee approval and demonstrated re-established credit.
When a credit bureau dispute flag appears on a borrower's credit report at the time of application, Fannie Mae requires the underwriter to:
Answer: Ensure the disputed tradeline is not artificially inflating the score
Fannie Mae requires underwriters to evaluate whether active dispute flags may be suppressing derogatory information that would otherwise lower the score.
What is the maximum debt-to-income ratio typically allowed by Fannie Mae's DU system for a conventional conforming loan with compensating factors?
Answer: 50%
Fannie Mae's DU can approve DTIs up to 50% when the automated system identifies sufficient compensating factors.
A borrower pays a debt off at closing that was previously included in the DTI. The underwriter must verify that:
Answer: The payoff is not borrowed funds from the same transaction
Payoffs at closing must come from the borrower's own eligible assets, not from loan proceeds, to prevent circular debt structures.
A borrower's credit profile shows a pattern of credit-seeking behavior with 8 new inquiries in the past 90 days. The underwriter's primary concern is:
Answer: Potential undisclosed liabilities that have not yet appeared on the credit report
Multiple recent inquiries suggest the borrower may have taken on new debt not yet reflected on the credit report, creating undisclosed liabilities.
Which scenario represents the BEST example of a thin credit file?
Answer: A borrower with two open credit accounts and no score generated due to insufficient history
A thin credit file means there is insufficient credit history to generate a score, typically fewer than three tradelines with adequate history.
A co-borrower with a 610 credit score is added to strengthen the income on a mortgage application where the primary borrower has a 740 score. What is the qualifying credit score?
Answer: 610 — use the lower of the two middle scores
Agency guidelines require using the lower of the two middle representative scores when there are two borrowers on a loan.