A borrower provides an MLO with confidential financial information during pre-qualification that reveals they're planning to leave their current job after closing. How should the MLO handle this under good faith obligations?
Correct Answer
A) Explain that current employment must be verified and stable employment is required
Good faith requires honest dealing with all parties. The MLO must explain loan requirements honestly while maintaining appropriate confidentiality. The borrower needs to understand that employment stability is a loan requirement.
Why This Is the Correct Answer
Good faith requires honest dealing with all parties. The MLO must explain loan requirements honestly while maintaining appropriate confidentiality. The borrower needs to understand that employment stability is a loan requirement.
More Origination Questions
For a construction-to-permanent loan, when must the initial Closing Disclosure be provided for the construction phase?
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:
A borrower requests that all loan communications be sent only to their workplace address because they are in the process of divorce and don't want their spouse to see mortgage-related documents. How should the MLO handle this request?
A borrower wants to compare an adjustable-rate mortgage (ARM) to a fixed-rate mortgage. What is the MOST important disclosure the MLO must provide about the ARM?
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's bank statement shows monthly service fees of $25 and overdraft fees totaling $150 over two months. How should the MLO address this in the loan evaluation?
How long is a typical pre-approval letter valid?
During the application process, an MLO realizes that a borrower would qualify for a government program with better terms, but the MLO's company doesn't offer that program type. What does good faith require?
An MLO issues a pre-approval letter valid for 90 days. On day 85, the borrower's credit score drops 40 points due to a new credit inquiry and increased credit utilization. What should the MLO do?
People Also Study
Federal Mortgage-Related Laws
23% of exam
General Mortgage Knowledge
23% of exam
Ethics, Fraud & Consumer Protection
17% of exam
Uniform State Test Content
12% of exam
Related Study Resources
Previous Question
A lender discovers that local municipality fees have increased by $200 since the Loan Estimate was provided due to a city council vote. The lender wants to pass this cost to the borrower. This scenario:
Next Question
A lender issues a Loan Estimate on Monday. On Wednesday, the borrower emails expressing intent to proceed. On Thursday, the property appraisal comes in $20,000 lower than expected, requiring a loan amount reduction. When must a revised Loan Estimate be provided if one is issued?