P4-69 Quiz

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Question 1 of 4

1. Question
When may a contingent liability from a mortgage assumption be excluded from a borrower’s long-term debt when calculating the obligations-to-income ratio?
- When the property purchaser has made at least 12 on-time payments
- When the borrower no longer occupies the property
- When a formal assumption agreement is executed and evidence of ownership transfer is obtained
- Only when the borrower receives a full release of liability
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Question 2 of 4

2. Question
Under what circumstances may court-ordered assigned debt be excluded from the borrower’s long-term debt obligations?
- When the borrower states the debt is no longer their responsibility
- When the debt has been paid down below a certain balance
- When the lender verifies the other party’s payment history
- When the lender obtains applicable court-order pages and documents any transfer of ownership
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Question 3 of 4

3. Question
When may a bridge (or swing) loan and the payments on the borrower’s existing home be excluded from long-term debt calculations?
- When the borrower intends to sell the current home within six months
- When the borrower has equity of at least 20 percent in the existing home
- When the lender verifies the borrower’s intent to sell the property
- When the lender obtains an executed sales contract and the borrower has six months of reserves for outstanding liens
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Question 4 of 4

4. Question
What is required when a borrower answers “Yes” to the question, “Are there any outstanding judgments against you?”
- Judgments may remain unpaid if the borrower has sufficient income
- All judgments must be settled prior to making the loan, with possible exceptions for cash-out refinances to satisfy certain liens
- Only tax-related judgments must be resolved
- Judgments may be ignored if they are disputed
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