A borrower's current mortgage has a 6.5% interest rate and 25 years remaining. A lender offers to refinance to a 6.0% rate with 30 years. Which factor would BEST demonstrate tangible net benefit?
Correct Answer
B) The borrower will save money over the life of the loan despite the longer term
Under 12 CFR 1026.43(e)(3), tangible net benefit must consider the totality of the loan terms. While a lower rate and payment are factors, the overall benefit to the borrower over the loan's life is the most comprehensive measure of tangible net benefit.
Why This Is the Correct Answer
Under 12 CFR 1026.43(e)(3), tangible net benefit must consider the totality of the loan terms. While a lower rate and payment are factors, the overall benefit to the borrower over the loan's life is the most comprehensive measure of tangible net benefit.
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An MLO discovers that their lender's rate sheet contains an error that benefits borrowers but costs the lender money. The MLO's good faith obligation is to: