Processing And Underwriting Flashcards
How long must the income or job be before it can be counted as an asset?
2 years
How must the borrower prove their income?
Tax returns and/or W-2
Some types of income with expiration require years of continues proof. How many years?
3 years. Example is child support as income
What can you do if a type of non taxable income is used as income? The underwriter can ….
Do a gross up by adding 25% to that non taxable income
How much rental income can be counted?
Only 75%
What percent ownership in a business makes the owner self employed?
25% or greater ownership makes him self employed
Name a few things that are not considered liabilities.
Utilities, cell phone payments, insurance payments, tax payments, union dues, voluntary deduction on paystub
What are the 3 credit score bureaus?
Experience, Equifax and Transunion
What is the bankruptcy rules for conventional loans?
Ch. 13
-Discharged within the past 2 years, dismissed within the last 4 years, or filed but neither dismissed or discharged within the last 4 years
Non chapter 13 bankruptcies, cannot have filed, discharged or dismissed within the last 4 years.
For conventional loans what are the rules involving foreclosure?
No foreclosures in past 7 years. 4 years for a short sale.
What created the ATR rule?
Dodd-Frank Wall Street reform a to of 2010, TILA section went into effect in 2014.
8 considerations for ATR
- Current or reasonable expected income or assets
- Current employment
- Monthly mortgage payment of this loan
- Monthly payment on an simultaneous loan secured by same property
- Property taxes and insurance
- Debts, alimony and child support
- Monthly DTI
- Credit history
What are the 4 types of QMs
- General QM
- Temporary QM
- Small Creditor
- Balloon-Payment QM
High Cost loans requires homeownership counseling requirements, how many days must that be sent?
3 bus days after app
What section are higher-priced loans in TILA
Section 35
What are the two types of LTVs?
CLTV or Combined Loan to Value
TLTV or Total Loan to Value
CLTV = 1st mortgage + 2nd mortgage divided by the current value of property
TLTV=Maximum loan amount + HELOC max divided by the value
What are the 3 types of appraisals?
Sales comparison approach - (most common) comparing property to other similar properties in the area.
Cost Approach - derived from land + construction cost - depreciation.
Income Approach - (Investment Property) Using the potential income of property to determine the value.
What does Title mean?
The collective term for all a borrower’s legal rights to own, use and dispose of land.
What is an easement?
Legal right to use another’s land for a specific limited purpose. Ie. Widening a sidewalk
What is a restrictive covenant?
Is a clause in a deed or a lease to real property that limits what the owner of the land or lease can do with th property.
What is encroachment?
Where property owner violates the property rights of his neighbor by building something on the neighbors land or by allowing something to hand over on the neighbors property.
What is title insurance?
Protects against the possibility of future loss should the borrowers’ legal rights to their property be challenged.
What is a Deed?
The deed is a document that is used by the owner of a real property to transfer all or part of his interest in the property to another. (Evidence of title)
Co-Ownership is also known as concurrent ownership. What is concurrent ownership?
The ownership of a property by two or more persons who share title to real property.
What are the three types of ownership?
- Tenancy in common
- Right to survivorship
- Joint Tenancy
