Income & Employment Verification 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 Income & Employment Verification flashcards as text
What IRS form does an underwriter typically use to verify a borrower's reported income directly with the IRS?
Answer: Form 4506-C
IRS Form 4506-C (Request for Copy of Tax Return Transcript) allows the lender to obtain tax transcripts directly from the IRS to verify borrower-reported income.
A borrower receives rental income from an investment property. When is rental income from a subject property eligible to offset the mortgage payment?
Answer: When 75% of the gross rents exceed the PITIA of the subject property
Agency guidelines allow 75% of the gross rental income to offset the PITIA if it exceeds that payment, reducing or eliminating the net rental obligation.
Which of the following income types is NOT typically stable enough to include in qualifying income under standard agency guidelines?
Answer: A one-time insurance settlement payment
One-time or non-recurring income such as an insurance settlement is not considered stable and cannot be used for qualifying purposes.
For a borrower with a two-year history of overtime income, the underwriter should:
Answer: Average the overtime over two years and add it to base income
Overtime income with a documented two-year history may be averaged and added to base qualifying income per agency guidelines.
A verbal verification of employment (VVOE) is typically required:
Answer: Within 10 business days before loan closing
A VVOE is generally required within 10 business days before closing to confirm the borrower is still employed and the income source is valid.
When analyzing self-employed borrower income using Schedule C (sole proprietor), the underwriter adds back which of the following to net profit?
Answer: Depreciation and depletion deductions
Non-cash deductions such as depreciation and depletion are added back to net profit when calculating self-employed qualifying income.
A borrower receives child support income. What documentation is required to use it for qualification?
Answer: Court order or divorce decree plus 12 months of receipt history
To use child support income, underwriters require a court order establishing the amount and at least 12 months of documented receipt, typically verified through bank statements.