For a manually underwritten Fannie Mae loan, the borrower has three authorized-user tradelines owned by a parent who is not a co-borrower. What should the lender check before considering those tradelines?
Correct Answer
C) Whether written records show the borrower was the actual and sole payer for at least the preceding 12 months
C. Check the documented payment-history exception for this manual-underwriting scenario. The parent is not another borrower on the mortgage, so that exception does not apply. Written evidence of the applicant being the sole actual payer for the required period can permit consideration; family relationship alone is insufficient. Scope and exceptions: When this payment evidence is used, consider the payment history and include the monthly obligation in DTI. DU instead considers authorized-user tradelines without additional investigation unless DU instructs otherwise. Do not infer who paid solely from authorized-user status. Source: Consideration of Authorized User Accounts — https://selling-guide.fanniemae.com/sel/b3-5.3-06/authorized-users-credit Authorized User Tradelines — https://selling-guide.fanniemae.com/sel/b3-5.3-09/du-credit-report-analysis
Why This Is the Correct Answer
C. Check the documented payment-history exception for this manual-underwriting scenario. The parent is not another borrower on the mortgage, so that exception does not apply. Written evidence of the applicant being the sole actual payer for the required period can permit consideration; family relationship alone is insufficient. Scope and exceptions: When this payment evidence is used, consider the payment history and include the monthly obligation in DTI. DU instead considers authorized-user tradelines without additional investigation unless DU instructs otherwise. Do not infer who paid solely from authorized-user status.
Why the Other Options Are Wrong
Option A: The parent must be added to the loan as a co-borrower on the note
Adding the parent is not required when the documented-payment exception applies.
Option B: The 3 tradelines count fully, as they appear on the credit report
Credit-report appearance alone is insufficient for manual underwriting.
Option D: The 3 tradelines are excluded, since authorized users have no history
It ignores permitted exceptions and overstates the rule.
Exam Tip
Identify the underwriting path before deciding how to treat authorized-user credit.
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