What documentation is required to verify a borrower's employment status for mortgage qualification?
Correct Answer
B) Written verification of employment and income
Under the Ability-to-Repay rule (12 CFR 1026.43) and standard underwriting guidelines, lenders must obtain written verification of employment and income, typically through verification of employment forms, pay stubs, and tax returns to document the borrower's ability to repay.
Why This Is the Correct Answer
Under the Ability-to-Repay rule (12 CFR 1026.43) and standard underwriting guidelines, lenders must obtain written verification of employment and income, typically through verification of employment forms, pay stubs, and tax returns to document the borrower's ability to repay.
More Origination Questions
A borrower has a construction-to-permanent loan with a 12-month construction phase. At month 10, construction is only 60% complete due to delays. What is the most likely outcome?
For a construction-to-permanent loan, when must the initial Closing Disclosure be provided for the construction phase?
During a refinance transaction, the appraiser determines that significant unpermitted additions were made to the property. The appraiser wants to discuss this with the MLO before finalizing the report. What should the MLO do?
An appraiser discovers that a property has significant foundation issues that were not disclosed. The appraiser reduces the property value by $25,000 and includes detailed comments about the structural problems. The loan officer is upset because this will kill the deal. Under AIR, the loan officer:
An MLO's compensation structure includes higher payments for certain loan products. When is it acceptable to recommend these higher-compensated products?
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A borrower has a conventional loan with PMI that was originated in 1995. When must the lender terminate the PMI under the HPA?
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A borrower's credit profile qualifies them for loans in all three categories: conventional, government, and non-QM. The MLO only presents conventional loans because they believe government and non-QM loans are 'inferior products.' This practice: