Term
| According to the FHA 4155.1, what are the FOUR C's of Credit that the underwriter evaluates. |
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Definition
Credit History
Capacity to Repay
Cash assets available to close the mortgage
Collateral |
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Term
| What do FHA's general credit policy requirements for underwriting a mortgage involve? (3) |
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Definition
Considering the type of income the borrower needs in order to qualify
Analyzing the borrower's liabilities to determine creditworthiness
Reviewing ratios, including DTI, and compensating factors. |
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Term
| The maximum FHA loan limits vary depending upon what three things? |
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Definition
1. The specific program under which a loan is insured.
2. Number of dwelling units in the property
3. Geographic location of the property. |
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Term
| Under most programs, what is the maximum insurable mortgage the lesser of? |
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Definition
1. The statutory loan limit for the area OR
2. A percentage of the lesser of the appraised value or sales price. |
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Term
| How much can mortgage limits increase in high cost areas? |
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Definition
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Term
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Definition
| Metropolitan Statistical Area |
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Term
| What is the maximum mortgage term for FHA insured loans? What is the maximum mortgage term for FHA insured ARMs? |
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Definition
30 years.
MUST be for 30 years. |
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Term
| What is the minimum time for lock-ins or rate locks for FHA loans? |
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Definition
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Term
| What form must the lender provide to the borrower to explain that the loan terms are negotiable? |
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Definition
| HUD-92900-B HUD Interest Rate Disclosure Statement. |
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Term
| The lender must re-qualify a borrower if there is any increase in what two things? |
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Definition
Interest rate OR
discount points |
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Term
| What is the Direct Endorsement (DE) underwriter responsible for? |
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Definition
| Determining creditworthiness of a borrower. |
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Term
| What two things must a rejection notice contain? |
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Definition
1. All the reasons for denial/ineligibility
2. Any counter proposals. |
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Term
| What rejection notice is issued on FHA-processed loans? |
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Definition
| HUD-59100 Mortgage Insurance Certification/Non-Endorsement |
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Term
| For how long must the lender retain case binders on rejected loans? |
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Definition
| 26 months from the date of either receipt of the application by the DE underwriter OR rejection by the appropriate Homeownership Center. |
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Term
| When can the initial 1003 loan application be executed by power of attorney? |
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Definition
1. Military personel
2. Incapacitated borrowers |
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Term
| Mortgage loan applications MUST be in one or more individual's name except for when? |
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Definition
| Nonprofit corporations that provide assistance to low and moderate income families. |
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Term
| At loan closing, how old can documents in the mortgage loan application be? |
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Definition
up to 120 days old
or 180 days old for new construction.
unless other situations arise. |
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Term
| What Mortgage Scorecard is required by FHA for all transactions? Why? When is it not required? |
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Definition
Technology Open To Approved Lenders? TOTAL
It has proven itself.
Not required when it involves borrowers without credit, and streamline refi's |
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Term
| What documents are required for FHA mortgage credit analysis? (8) |
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Definition
1003
Loan Underwriting and Transmittal Summary
Evidence of SSN
Credit Report
VOD
VOE
Federal Income Tax Returns
Sales Contract |
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Term
| What are acceptable alternatives to the VOE? |
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Definition
| Original pay stubs covering the most recent 30 day period, AND the original IRS W-2 forms from the previous two years. |
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Term
| What two IRS forms are used for verifications? |
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Definition
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Term
| Under what conditions are business tax returns NOT required? |
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Definition
ALL of the following.
Individual federal income tax returns show increasing self-employed income over the past two years.
Business accounts are not the source of funds to close
FHA-insured mortgage transaction is not a cash out refi |
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Term
| What appraisal documents are required for mortgage credit analysis? |
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Definition
Form 1004MC Market Conditions Addendum to the Appraisal Report AND
one of the following.
1004 Uniform Residential Appraisal Report
1004C Manufactured Home Appraisal Report
1073 Individual Condominium Unit Appraisal Report
1025 Small Residential Income Property Appraisal Report. |
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Term
| What is a streamline refinance? |
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Definition
| A refi with the sole purpose of lowering the interest rate. |
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Term
| What information must a credit report that is submitted with a loan application contain? |
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Definition
1. Credit
2. Residence history
3. Public records information. |
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Term
| What are the two types of traditional credit reports? |
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Definition
"tri-merged"
Residential Mortgage Credit Report (RMCR) |
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Term
| What credit information is included in the traditional credit report? |
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Definition
All inquiries made in the last 90 days.
All credit info for the last seven years regarding bankruptcies, judgments, lawsuits, foreclosures, and tax liens
and for each borrower debt listed, the date the account was opened, high credit amount, required payment amount, unpaid balance and payment history. |
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Term
| When is the Residential Mortgage Credit Report required? |
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Definition
| When there is a dispute of information on the tri-merged credit report, and when the underwriter determines that it is more prudent. |
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Term
| What is the maximum insurable mortgage on a purchase the lesser of? |
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Definition
Either the loan limit for the area OR
LTV applied to the lesser of the sales price or appraised value. |
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Term
| For FHA loans, how much can the seller contribution be? |
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Definition
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Term
| Why is there a maximum percentage of seller or interested 3rd party contributions? |
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Definition
| Because they would be considered "inducements to purchase." Apparently, that's bad. |
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Term
| If personal property like a car, boat, riding lawn mower, furniture, or television is included in the sale, what must happen? |
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Definition
| The lender must deduct the value of the items from the sales price before applying LTV. |
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Term
| Same as previous question, but including items such as a range, fridge, dishwasher, washer, dryer, carpeting, window items, etc. |
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Definition
| HOC determines if items should be deducted from the sales price. |
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Term
| When can repairs and improvements be added to the sales price before calculating the mortgage amount? |
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Definition
When the repairs and improvements are required by the appraiser and paid by the borrower
AND
when the sales contract or addendum identifies the borrower as responsible for payment and completion of repairs. |
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Term
| weather and solar related things may be added to the mortgage amount as well. |
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Definition
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Term
| What is an "identity of interest transaction"? |
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Definition
| A sale between parties with family or business relationships. |
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Term
| What is the maximum LTV for identity-of-interest transactions on principle residences for FHA loans? |
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Definition
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Term
| How is a non-occupying borrower transaction defined? |
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Definition
| It involves two or more borrowers where one or more of the borrowers will not occupy the property as his/her primary residence. |
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Term
| What is the maximum LTV in a non-occupying borrower transaction? |
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Definition
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Term
| What is the monthly mortgage payment limit on 3-4 unit properties? |
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Definition
| MMP/Net rental income does not exceed 100%. |
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Term
| What goes into the monthly mortgage payment for three and four unit properties? |
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Definition
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Term
| How is net rental income calculated for 3-4 unit properties? |
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Definition
| Appraisers fair market rent from all units minus the greater of the appraiser's estimate for vacancies OR vacancy factor used by the HOC. |
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Term
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Definition
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Term
| How much must a borrower's personal reserves be for three to four unit properties? (Different than investment properties) |
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Definition
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Term
| What are LTV limits when building on a borrower's own property? |
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Definition
| The lesser of the appraised value of the proposed home and land OR the documented cost of the property. |
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Term
| Aside from normal things, what can be used for the borrower's cash investment when it comes to transactions for building on one's own land? |
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Definition
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Term
| Aside from normal things, what can be used to pay the down payment for paying off land contracts? |
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Definition
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Term
| What is the maximum LTV on Manufactured Home Construction-Permanent Loans |
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Definition
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Term
| What types of refinance transactions does the FHA insure? |
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Definition
Streamline refis
no cashout
cashout |
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Term
| What is the maximum term of any refinance with an appraisal? What is the maximum term of any streamline refi without an appraisal? |
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Definition
30 years
The remaining term of the existing mortgage plus 12 years or 30 years, whichever is less. |
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Term
| How long are FHA appraisals on existing properties valid for? |
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Definition
| 6 months. But they can't be reused. |
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Term
| What is the Maximum LTV, Maximum CLTV, and UFMIP for a no cash out refi. |
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Definition
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Term
| What is the Maximum LTV, Maximum CLTV, and UFMIP for a FHA to FHA Streamline refi? |
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Definition
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Term
| What is the Maximum LTV, Maximum CLTV, and UFMIP for a cash out refi |
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Definition
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Term
| What is the Maximum LTV, Maximum CLTV, and UFMIP for a refi for people underwater? |
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Definition
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Term
| For how long is the previous refi available? |
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Definition
| Until 12/31/2012 if the world still exists at that time since, you know, the Mayans predicted that the world is going to end on 12/21/2012 |
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Term
| Cash out refinance transactions are only permitted on ___________ ________ ________. |
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Definition
| owner-occupied principal residences. |
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