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With which type of loan may the AUS require less documentation, potentially only verbal verification of employment?
Graduated Payment
FHA
Alt-A
A-minus
The correct answer is: Alt-A
The Alt-A loan is distinguished by its flexibility compared to more traditional loan types. These loans typically cater to borrowers who may not meet all the standard requirements but are still considered to have a reasonable credit profile. Due to this nuance, Automated Underwriting Systems (AUS) often allow for reduced documentation requirements. This can include the possibility of verbal verification of employment rather than more extensive documentation such as pay stubs or employment history. In the context of the other loan types, Graduated Payment loans usually follow more conventional documentation requirements due to their structure, which indicates they gradually increase in payments over time. FHA loans have defined guidelines and documentation standards set by the Federal Housing Administration, which do not typically include leniency in employment verification. Meanwhile, A-minus loans are structured similarly to conventional loans and would still require standard documentation. Thus, the characteristics of Alt-A loans make them unique in their potential for less stringent documentation requirements, aligning with the indicated answer in the question.