A borrower's employment status changes from W-2 employee to independent contractor between application and closing, but their income remains the same. What documentation update is required?
Correct Answer
B) New employment verification and income documentation reflecting contractor status
Under ATR requirements (12 CFR 1026.43), creditors must verify and document income at closing. A change from employee to independent contractor represents a significant change in employment status and income type, requiring new documentation to verify the stability and continuity of the contractor income, even if the amount is the same.
Why This Is the Correct Answer
Under ATR requirements (12 CFR 1026.43), creditors must verify and document income at closing. A change from employee to independent contractor represents a significant change in employment status and income type, requiring new documentation to verify the stability and continuity of the contractor income, even if the amount is the same.
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