A borrower's loan application shows an estimated property value of $400,000. The appraisal comes back at $375,000, requiring a higher down payment. This occurs 5 days after the original Loan Estimate. What must the lender do?
Correct Answer
B) Issue a revised Loan Estimate within 3 business days of receiving the appraisal
Under 12 CFR 1026.19(e)(3)(iv)(C), a change in the property value that affects settlement costs or loan terms constitutes a changed circumstance. The lower appraisal affects the loan-to-value ratio and down payment requirement, requiring a revised Loan Estimate within 3 business days of receiving the appraisal.
Why This Is the Correct Answer
Under 12 CFR 1026.19(e)(3)(iv)(C), a change in the property value that affects settlement costs or loan terms constitutes a changed circumstance. The lower appraisal affects the loan-to-value ratio and down payment requirement, requiring a revised Loan Estimate within 3 business days of receiving the appraisal.
More Origination Questions
A borrower has a construction-to-permanent loan with a 12-month construction phase. At month 10, construction is only 60% complete due to delays. What is the most likely outcome?
For a construction-to-permanent loan, when must the initial Closing Disclosure be provided for the construction phase?
During a refinance transaction, the appraiser determines that significant unpermitted additions were made to the property. The appraiser wants to discuss this with the MLO before finalizing the report. What should the MLO do?
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:
An MLO's compensation structure includes higher payments for certain loan products. When is it acceptable to recommend these higher-compensated products?
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
Previous Question
A lender provides a revised Loan Estimate due to a changed circumstance but fails to include the required changed circumstance disclosure. What is the consequence?
Next Question
A borrower calls an MLO at 9 PM on a Friday requesting immediate disclosure of their APR calculation methodology for a loan they applied for earlier that week. The MLO has not yet provided the Loan Estimate. What is the MLO's obligation regarding this request?