A borrower provides a lease agreement showing rental income of $2,500 per month, but the property has been vacant for the past 3 months. How should this rental income be treated?
Correct Answer
C) The rental income cannot be used due to current vacancy
Current vacancy typically disqualifies rental income from being used for qualifying purposes. Lenders generally require evidence of current rental income or a signed lease with security deposit to demonstrate the property is generating income. A 3-month vacancy indicates the property is not currently producing qualifying income.
Why This Is the Correct Answer
Current vacancy typically disqualifies rental income from being used for qualifying purposes. Lenders generally require evidence of current rental income or a signed lease with security deposit to demonstrate the property is generating income. A 3-month vacancy indicates the property is not currently producing qualifying income.
More Origination Questions
A borrower has a construction-to-permanent loan with a 12-month construction phase. At month 10, construction is only 60% complete due to delays. What is the most likely outcome?
For a construction-to-permanent loan, when must the initial Closing Disclosure be provided for the construction phase?
During a refinance transaction, the appraiser determines that significant unpermitted additions were made to the property. The appraiser wants to discuss this with the MLO before finalizing the report. What should the MLO do?
An appraiser discovers that a property has significant foundation issues that were not disclosed. The appraiser reduces the property value by $25,000 and includes detailed comments about the structural problems. The loan officer is upset because this will kill the deal. Under AIR, the loan officer:
An MLO's compensation structure includes higher payments for certain loan products. When is it acceptable to recommend these higher-compensated products?
An MLO provides pre-qualification based on a borrower's current employment but learns the borrower is starting a new job next month with a $10,000 salary increase. How should this information be handled?
An MLO issues a pre-approval letter that states 'subject to satisfactory appraisal and final underwriting approval.' The borrower uses this letter to make an offer, but the appraisal comes in $15,000 below the purchase price. What is the lender's obligation?
A borrower submits a mortgage application on Monday at 2:00 PM. The lender determines the application is complete on Wednesday at 10:00 AM. What is the latest day the Loan Estimate must be delivered to comply with TRID requirements?
How long is a typical pre-approval letter valid?
A borrower requests a rate lock on a construction-to-permanent loan where the construction phase is 8 months and the permanent phase begins immediately after. The lender's rate lock policy allows maximum 120-day locks. How should the MLO handle this situation?
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A borrower has a 30-year fixed-rate mortgage at 4.5% with 25 years remaining. They want to refinance to a 15-year fixed-rate mortgage at 4.0%. The monthly payment will increase by $400. Under what circumstances would this refinance meet the tangible net benefit requirement?