American Bankers Association Exam CRCM Topic 2 Question 78 Discussion

Actual exam question for American Bankers Association's CRCM exam

Question #: 78
Topic #: 2

[All CRCM Questions]

Underwriting standards in Subprime Mortgage Lending include:

AThe borrower's debt-to-income ratio should include the borrower's total yearly housing-related payments as a percentage of gross monthly income

BInstitutions should have a clear policy governing the use of risk-layering features, such as reduced documentation loans or simultaneous second lien mortgages

CStated income and reduced documentation loans to subprime borrowers should be made only if there are clear, documented mitigating factors

DMitigating factors should be present when risk layering features are combined in order to support the underwriting decision and the borrower's repayment capacity

Show Suggested Answer

Suggested Answer: B

by Olive at Dec 13, 2023, 05:17 AM

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Celeste

6 days ago

I believe institutions should have clear policies in place to avoid risky lending practices that could lead to defaults.

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Gerald

6 days ago

Option B seems to cover the key underwriting standards for subprime lending. Clear policies on risk-layering features are crucial to manage the risks involved.

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Ryan

12 days ago

I agree, it's crucial to consider factors like debt-to-income ratio and documentation when lending to subprime borrowers.

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Alica

16 days ago

I think underwriting standards are important for ensuring borrowers can repay their loans.

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