A borrower receives a DU recommendation of 'Approve/Eligible' for a conventional loan, but the MLO notices the borrower's employment gap of 8 months ending 3 months ago. Should the MLO be concerned about this gap affecting the loan approval?
Correct Answer
C) No, but the gap should be documented with an explanation letter
While DU has approved the loan, employment gaps should still be documented with explanation letters to provide context for the underwriter. DU's approval indicates the gap doesn't disqualify the borrower, but proper documentation helps ensure smooth processing and addresses any questions that may arise during the underwriting review process.
Why This Is the Correct Answer
While DU has approved the loan, employment gaps should still be documented with explanation letters to provide context for the underwriter. DU's approval indicates the gap doesn't disqualify the borrower, but proper documentation helps ensure smooth processing and addresses any questions that may arise during the underwriting review process.
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