A borrower's loan receives a 'Caution' message from Loan Prospector (LP) indicating 'Review Income Documentation.' The borrower is self-employed and provided tax returns showing a loss in the most recent year but profits in the previous two years. What is the most appropriate next step?
Correct Answer
C) Perform a detailed analysis of the business financials and trends to determine qualifying income
When LP provides a 'Caution' message for self-employed income review, underwriters must perform a comprehensive analysis of the business financial trends, including profit/loss statements, balance sheets, and tax returns to determine the most representative qualifying income. A loss in one year doesn't automatically disqualify, but requires careful evaluation of business stability and future earning capacity.
Why This Is the Correct Answer
When LP provides a 'Caution' message for self-employed income review, underwriters must perform a comprehensive analysis of the business financial trends, including profit/loss statements, balance sheets, and tax returns to determine the most representative qualifying income. A loss in one year doesn't automatically disqualify, but requires careful evaluation of business stability and future earning capacity.
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A Loan Estimate shows $0 for recording fees because the lender was unsure of the exact amount. At closing, the actual recording fees are $125. The lender argues this isn't a tolerance violation since $0 was disclosed in good faith. Which statement is correct?
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A borrower received a pre-qualification estimate of $250,000 but was only approved for $200,000 during the actual application process. What most likely caused this difference?