A borrower pays $1,200 to be added as an authorized user on 3 seasoned accounts belonging to strangers. If these purchased accounts are used to misrepresent the borrower's own repayment history, what is the underwriting-integrity problem?
Correct Answer
C) Improper: the borrower is misrepresenting someone else’s repayment history as their own
C. The defect is the stipulated false representation of repayment history. Appearing as an authorized user is not itself proof that the borrower made the historical payments. Fannie Mae’s DU guidance actually considers designated authorized-user tradelines. It separately requires action on contradictory information; authorized-user status is not a blanket fraud finding. Scope and exceptions: Do not teach that all authorized-user accounts are unlawful or excluded. Automated and manual underwriting have different requirements; this item does not determine criminal liability. Source: B3-5.3-09, Authorized User Tradelines; Contradictory, Derogatory, or Erroneous Information (08/05/2026) — https://selling-guide.fanniemae.com/sel/b3-5.3-09/du-credit-report-analysis
Why This Is the Correct Answer
C. The defect is the stipulated false representation of repayment history. Appearing as an authorized user is not itself proof that the borrower made the historical payments. Fannie Mae’s DU guidance actually considers designated authorized-user tradelines. It separately requires action on contradictory information; authorized-user status is not a blanket fraud finding. Scope and exceptions: Do not teach that all authorized-user accounts are unlawful or excluded. Automated and manual underwriting have different requirements; this item does not determine criminal liability.
Why the Other Options Are Wrong
Option A: Proper where the borrower discloses the $1,200 fee to the lender
Disclosure of the fee does not make the separate false payment-history claim accurate.
Option B: Proper, because authorized user accounts appear on the report anyway
Report inclusion does not establish who made the payments.
Option D: Improper only where the 3 accounts carry balances over the limit
An account need not be over limit for its history to be misrepresented.
Exam Tip
Separate a correctly labeled tradeline from a false claim about personal repayment.
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