An underwriter needs the current FHA rule on how a self-employed borrower with 2 years of returns documents income on a $412,000 single-family purchase. Which publication should the underwriter consult for current FHA single-family underwriting policy?
Correct Answer
D) HUD Handbook 4000.1, the consolidated FHA single-family policy
D. Consult the current FHA Single Family Housing Policy Handbook 4000.1. HUD identifies 4000.1 as its consolidated source for single-family policy, including origination and insurance endorsement. Use the current published version and applicable effective dates rather than relying on an archived handbook. Scope and exceptions: Identifying the handbook does not prove this borrower qualifies or that two years of returns alone is sufficient. Consult the relevant income-documentation provisions and applicable policy updates before underwriting; this question does not establish a particular income calculation. Source: Information page: consolidated policy, currently published version and updates — https://www.hud.gov/hud-partners/single-family-handbook-4000-1
Why This Is the Correct Answer
D. Consult the current FHA Single Family Housing Policy Handbook 4000.1. HUD identifies 4000.1 as its consolidated source for single-family policy, including origination and insurance endorsement. Use the current published version and applicable effective dates rather than relying on an archived handbook. Scope and exceptions: Identifying the handbook does not prove this borrower qualifies or that two years of returns alone is sufficient. Consult the relevant income-documentation provisions and applicable policy updates before underwriting; this question does not establish a particular income calculation.
Why the Other Options Are Wrong
Option A: Ginnie Mae MBS Guide 5500.3, which governs pooling of FHA loans
The MBS pooling guide is not the primary FHA borrower-underwriting source requested.
Option B: HUD Handbook 4155.1, retired when FHA consolidated its policy
This historical handbook is not the current consolidated publication identified by HUD.
Option C: VA Lender's Handbook M26-7, which governs the VA guaranty program
The question concerns FHA policy, not the VA program.
Exam Tip
Match the loan program to its current governing policy source before applying a rule.
More Mortgage Knowledge Questions
In a closing-readiness check, a risk reviewer sees facts tied to TILA Truth in Advertising. What should the file reflect?
In a training scenario, a trainee asks which official source controls FHA single-family origination policy. What action best follows the rule?
A compliance analyst compares the file facts with LTV Ratio Calculation during a licensing team review. Which conclusion is accurate?
A branch manager asks about a loan file because a trainee asks which official source controls FHA single-family origination policy. What should happen?
The loan team compares the file facts with ARM Cap Structures during a borrower follow-up call. Which conclusion is accurate?
A borrower has a 30-year fixed-rate mortgage with monthly principal and interest of $1,450. Property taxes increase, and taxes are paid through escrow. What can happen to the total monthly payment?
A loan has an outstanding principal balance of $240,000 and a 6% annual interest rate. Using simple monthly accrual, how much interest accrues for one month?
An annual escrow analysis for a current borrower shows a $780 shortage. One month's escrow payment is $600. The servicer elects to require repayment over the shortest installment period permitted by Regulation X for this shortage. What schedule is permitted?
What does an amortization schedule show for each scheduled payment?
A monthly principal-and-interest payment is $1,800, of which $1,250 is interest. How much principal is paid that month?
People Also Study
Federal Mortgage-Related Laws
24% of exam
Mortgage Loan Origination Activities
27% of exam
Ethics, Fraud & Consumer Protection
18% of exam
Uniform State Test Content
11% of exam