Which of the following items may lenders use to verify a borrower’s income for his ability to repay a mortgage?

Which of the following items may lenders use to verify a borrower’s income for his ability to repay a mortgage?
A . An electronic paystub
B . A copy of a check register
C . The income stated on the loan application
D . The borrower’s attestation that he expects a raise within 30 days

View Answer

Answer: A

Explanation:

To verify a borrower’s income for the ability-to-repay (ATR) requirements, lenders must rely on verified documentation, such as:

Electronic paystubs

W-2 forms

Tax returns

An electronic paystub is acceptable as it provides detailed proof of the borrower’s income, including salary, deductions, and other compensation.

Items like a check register (B), the income stated on the loan application (C), or a borrower’s attestation (D) without documentation are not considered valid forms of income verification.

References:

Dodd-Frank Act – Ability-to-Repay Rule

CFPB Ability-to-Repay/Qualified Mortgage (ATR/QM) Rule