Which of the following is NOT one of the 3 C's of underwriting?

• A. Conditions
• B. Credit
• C. Collateral
• D. Capacity

Answer: (A)

The main idea is that underwriting focuses on three borrower-risk factors commonly grouped as Credit, Capacity, and Collateral. Credit looks at the borrower’s debt history and willingness to repay, Capacity assesses the borrower’s ability to repay based on income and debts, and Collateral is the asset pledged to secure the loan. Conditions, on the other hand, refers to the terms, requirements, or external factors that must be met before closing (such as appraisals, title work, or insurance). These are important for approving and closing a loan, but they’re not part of the three borrower-risk Cs. Therefore, Conditions is not one of the three Cs.