Practice Test Geeks(CMA) Certified Mortgage Advisor Practice Test
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Credit Analysis and Borrower Qualification Flashcards

6 cards from real CMA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 6 Credit Analysis and Borrower Qualification flashcards as text

  1. What is a 'derogatory credit event' and how does it affect mortgage eligibility waiting periods?

    Answer: Negative credit events like foreclosure, bankruptcy, or short sale; each has mandatory waiting periods before mortgage eligibility

    Derogatory events such as Chapter 7 bankruptcy (4-year wait for conventional), foreclosure (7-year wait), and short sales each have mandatory seasoning periods before a borrower can qualify for a new mortgage.

  2. What does PITI stand for in mortgage payment calculation?

    Answer: Principal, Interest, Taxes, Insurance

    PITI stands for Principal, Interest, Taxes, and Insurance — the four components that make up a borrower's total monthly mortgage payment.

  3. What is the purpose of IRS Form 4506-C in the mortgage lending process?

    Answer: To authorize the lender to obtain the borrower's tax transcripts directly from the IRS

    Form 4506-C authorizes lenders to request tax return transcripts from the IRS to verify borrower-provided income documentation.

  4. How is rental income from an investment property typically calculated for mortgage qualifying purposes?

    Answer: 75% of gross rental income (to account for vacancy and expenses)

    Agency guidelines (Fannie Mae/Freddie Mac) typically allow 75% of gross rental income for qualifying, with the 25% discount representing vacancy and maintenance costs.

  5. What is the 'debt exclusion' rule related to student loans with income-driven repayment plans in mortgage qualification?

    Answer: If the income-driven payment is $0 or deferred, lenders must use 0.5%–1% of the balance as a hypothetical payment in DTI calculations

    For deferred or income-driven student loans showing $0 payments, Fannie Mae requires using 1% of the balance (or the documented payment) in DTI, while FHA requires 0.5% of the outstanding balance.

  6. What is a 'non-occupant co-borrower' and how do they help with mortgage qualification?

    Answer: An additional borrower whose income and credit are included in qualification, but who will not occupy the property

    A non-occupant co-borrower's income, assets, and credit are used to help qualify the primary borrower, even though they will not live in the home.