A borrower asks their MLO about the risks of an adjustable-rate mortgage (ARM) they are considering. The MLO knows rates are likely to increase but tells the borrower rates will probably stay low. This behavior violates which principle?
Correct Answer
B) Good faith and fair dealing
Good faith and fair dealing requires MLOs to provide honest, accurate information to borrowers. Deliberately misleading a borrower about the risks of an ARM violates this duty, as it involves dishonest dealing that could harm the borrower's financial interests.
Why This Is the Correct Answer
Good faith and fair dealing requires MLOs to provide honest, accurate information to borrowers. Deliberately misleading a borrower about the risks of an ARM violates this duty, as it involves dishonest dealing that could harm the borrower's financial interests.
More Origination Questions
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A construction loan borrower receives a draw request form that shows completion percentages for various construction phases. The borrower notices that 'rough electrical' is marked as 100% complete, but they know the electrician has only completed 75% of the work. What should the borrower do?
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