A borrower receives pre-approval for a conventional loan but decides to apply for an FHA loan instead. The MLO discovers the borrower has a bankruptcy from 18 months ago that meets FHA guidelines but not conventional guidelines. What should the MLO do?
Correct Answer
A) Process the FHA application since it meets those specific guidelines
Different loan programs have different eligibility requirements. FHA loans allow for bankruptcy discharge after 2 years while conventional loans typically require longer waiting periods. The MLO should evaluate the borrower under the appropriate program guidelines rather than applying irrelevant standards.
Why This Is the Correct Answer
Different loan programs have different eligibility requirements. FHA loans allow for bankruptcy discharge after 2 years while conventional loans typically require longer waiting periods. The MLO should evaluate the borrower under the appropriate program guidelines rather than applying irrelevant standards.
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