Documents for Underwriting Process
29 Questions
0 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

Which of the following documents is NOT required for underwriting?

  • Credit score report (correct)
  • HOA dues statement
  • Mortgage statement
  • Property tax statement

    • Homeowner's insurance must cover at least the dwelling coverage for the first mortgage and HELOC.

    True (A)

    What must members provide if their property is in a flood zone?

    Flood Insurance Policy

    The _____ must include both summer and winter tax bills for the subject property.

    <p>Property Tax statements</p> Signup and view all the answers

    Match the required document with its purpose:

    <p>Mortgage Statement = Verify the mortgage balance Divorce Decree = Ensure no claims from ex-spouse Trust Existence Document = List names of Successor Trustees HOA dues = Add to liabilities for DTI calculation</p> Signup and view all the answers

    How often might HOA dues be paid?

    <p>Monthly, bi-annually, or yearly (A)</p> Signup and view all the answers

    Members do not need to provide mortgage statements for vacation homes.

    <p>False (B)</p> Signup and view all the answers

    What information do we check against the homeowner’s insurance policy?

    <p>Sufficient dwelling coverage</p> Signup and view all the answers

    Which document is required from members for income verification?

    <p>Previous year W2 form (A)</p> Signup and view all the answers

    The Debt-to-Income (DTI) ratio must be under 60% for HELOC approval.

    <p>False (B)</p> Signup and view all the answers

    What is the required waiting period to grant a HELOC after purchasing or refinancing a primary residence?

    <p>6 months</p> Signup and view all the answers

    Debts and liabilities include property tax, insurance, and ______ fees that are not escrowed.

    <p>HOA</p> Signup and view all the answers

    Match the following underwriting factors with their explanations:

    <p>Credit history = Patterns of repayment Debt-to-income ratio = Must be under 55% Loan-to-value = Assessment of property value against loan amount Job time = Consideration of employment duration</p> Signup and view all the answers

    What happens if the mortgage date does not match the lien on title?

    <p>It can indicate a second mortgage (D)</p> Signup and view all the answers

    Escalating unsecured debt obtained without a significant event such as job loss is a concern for underwriters.

    <p>True (A)</p> Signup and view all the answers

    What is added to a member's liabilities if property tax and insurance are not escrowed?

    <p>Property tax and insurance</p> Signup and view all the answers

    What is required from self-employed members for income verification?

    <p>Two years of personal tax returns, all schedules, and K-1 forms (C)</p> Signup and view all the answers

    Members do not need to provide demographic information if they are denied a loan.

    <p>False (B)</p> Signup and view all the answers

    What is the minimum HELOC amount that can be granted based on home value?

    <p>$5000</p> Signup and view all the answers

    Members must sign the __________ to allow the addition of mortgage to their homeowners insurance policy.

    <p>Borrower Authorization</p> Signup and view all the answers

    Match the required documentation with its purpose.

    <p>Income Documentation = Verification of income Borrower Authorization = To add mortgage to insurance policy Disclosure of Affiliated Business Agreement = RESPA compliance Demographic Information = Required regardless of loan status</p> Signup and view all the answers

    Which of the following documents is needed to verify income for an employed borrower?

    <p>Two consecutive pay stubs (D)</p> Signup and view all the answers

    Escrow questions are not crucial if members indicate they do not escrow for tax/insurance.

    <p>False (B)</p> Signup and view all the answers

    What percentage of home value can be financed according to the guidelines?

    <p>80%</p> Signup and view all the answers

    What must be included in the proof of insurance documentation?

    <p>Declarations Page and vehicle information including VIN (B)</p> Signup and view all the answers

    Which of the following is required if there is an existing lien on the title?

    <p>Release of lien and payoff from the current lien holder (A)</p> Signup and view all the answers

    What information should be provided regarding the financial institution holding an existing lien?

    <p>Financial Institution Name, Account #, 10-Day Payoff Amount, and mailing address (B)</p> Signup and view all the answers

    Which item is NOT included in the additional documentation list?

    <p>Proof of prior insurance claims (B)</p> Signup and view all the answers

    What is a requirement for providing proof of income for business owners?

    <p>Business tax returns including all schedules (A)</p> Signup and view all the answers

    Study Notes

    Documents Needed for Underwriting

    • HOA Dues: Required for condos, whether attached or detached. Obtain payment amount and frequency from the member.
    • Mortgage Statement: Verify mortgage balance and escrow for property taxes and insurance. If taxes and insurance are not escrowed, add these costs to liabilities.
    • Property Tax Statements: Required for both summer and winter tax bills for the subject property and any vacation homes. Add to liabilities if not included in the mortgage payment.
    • Homeowner's Insurance: Check if dwelling coverage is sufficient to cover the first mortgage and HELOC. May request an increase if coverage is insufficient. For condos, require a copy of building insurance (covers the building to the walls) to supplement homeowner's policy.
    • Flood Insurance Policy (if applicable): Required if the property is in a flood zone.
    • Deed/Quit Claim Deed: Verify names on the property and vesting. If a trust is involved, request the Existence of Trust document.
    • Divorce Decree: Required by the title company if a divorce occurred during property record searches. Ensure the ex-spouse is not owed any money from the home.
    • Trust Existence: Provides the mortgage document vesting information, Liber and page of the recording, and lists the provisions of the Trust, including names of the Successor Trustees.
    • Origination Fee: Collected upfront and refunded if the loan is denied within three business days.

    Checking the Application

    • Review the Application Completely: Ensure all fields are complete.
      • Vesting on Page 1: Required for title order and mortgage document accuracy.
      • Escrow Question on Page 2: If members do not escrow for tax/ins, summer and winter tax bills are required.
      • Estimated Home Value and Mortgage Balance on Page 2: HELOCs are financed up to 80% of home value. Insufficient value may prevent granting the minimum HELOC amount ($5000).
      • Demographic: Must be completed, even if members decline. An MSR must complete it, even if it's a guess. Required for both approved and denied loans.
    • Disclosure of Affiliated Business Agreement: Required by RESPA at the time of referral to the title company.
    • Borrower Authorization: Members must sign and date this form. Used for homeowners insurance policy additions and employment verifications.

    Documents needed for Underwriting (cont.)

    • Income:
      • Two Consecutive Pay Stubs: Required if employed.
      • Two Years of Personal Tax Returns: Required for self-employed individuals, including all schedules and K-1 forms.
      • Clear and Legible Copies: Ensure all documents are easily readable.

    Scanning Documents

    • Review Attachments before Emailing: Verify all documents scanned clearly and are not cutting off any important information.
    • Organize Documents: Group multi-page documents together in order.

    Looking for Approval

    • Four Main Factors:
      • Credit History: Review repayment history and patterns.
      • Debt-to-Income Ratio: Must be under 55%. Unsecured debt ratio is also considered.
      • Loan-to-Value Ratio: Loan to value is reviewed.
      • Job Time: Job tenure is considered.
    • Other Compensating Factors: While these are not the main factors, they play a part in the approval process.
    • Income Calculation: Calculate hourly or salary amount and an average of commission amounts. Obtain the previous year's W2 form and the year-to-date total for the current year to calculate an average.
    • Debts: Look closely at the amount and timing of debts, especially revolving/unsecured credit. Escalating credit obtained over a short time period is a concern unless it's caused by a specific life event (illness, death, job loss). Verify the mortgage date matches the lien on title. If it doesn't, there may have been a mortgage since the initial one.
    • 6-Month and 12-Month Waiting Periods:
      • 6-month waiting period: Required after the purchase or refinance of the primary residence.
      • 12-month waiting period: Required for vacation homes.
      • Inform members about these waiting periods to avoid unnecessary credit pulls.
    • Liabilities:
      • Add property tax and insurance for any homes owned if these are not escrowed with the mortgage payment.
      • Include HOA fees, as they are rarely included in escrows unless they were seriously delinquent.

    Loan Documents Required for Closing

    • Two most recent pay stubs
    • Two most recent years of tax returns
    • Business owners need to include all tax return schedules
    • Insurance declarations page or binder
    • Proof of comprehensive and collision insurance deductibles under $1000
    • Vehicle information should be listed on the insurance policy, including VIN, year, make, and model
    • Driver must be listed on the insurance policy
    • Include Alliance Catholic Credit Union insurance lien information
    • Original title
    • “Green” Title for cars, “Blue” Title for boats
    • Release of prior lien, if applicable
    • Payoff details from the current lien holder, including:
      • Financial Institution Name
      • Account number
      • 10-day payoff amount
      • Mailing address to send the payoff
    • Final purchase amount
    • Salesperson name and contact information
    • Ensure the Purchase Agreement includes Alliance Catholic Credit Union lien information

    Studying That Suits You

    Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

    Quiz Team

    Related Documents

    HELOC Training 2024 PDF
    Required Loan Documents Checklist PDF

    Description

    This quiz covers the essential documents required for the underwriting process, including HOA dues, mortgage statements, property tax statements, and insurance policies. Understanding these requirements is crucial for ensuring a smooth transaction and protecting both borrower and lender interests.

    More Like This

    Use Quizgecko on...
    Browser
    Open
    Browser
    Browser