Underwriting Standards in Subprime Mortgage Lending Include

question 301

Multiple Choice

Underwriting standards in Subprime Mortgage Lending include:

• A) The borrower's debt-to-income ratio should include the borrower's total yearly housing-related payments as a percentage of gross monthly income
• B) Institutions should have a clear policy governing the use of risk-layering features, such as reduced documentation loans or simultaneous second lien mortgages
• C) Stated income and reduced documentation loans to subprime borrowers should be made only if there are clear, documented mitigating factors
• D) Mitigating factors should be present when risk layering features are combined in order to support the underwriting decision and the borrower's repayment capacity

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