A construction loan borrower receives a draw request form that shows completion percentages for various construction phases. The borrower notices that 'rough electrical' is marked as 100% complete, but they know the electrician has only completed 75% of the work. What should the borrower do?
Correct Answer
B) Correct the completion percentage before signing and submitting the draw request
Draw requests must accurately reflect actual completion percentages. Submitting false information about construction progress constitutes fraud and can result in loan acceleration, criminal charges, and other serious consequences. Accuracy in draw requests is essential for proper loan administration.
Why This Is the Correct Answer
Draw requests must accurately reflect actual completion percentages. Submitting false information about construction progress constitutes fraud and can result in loan acceleration, criminal charges, and other serious consequences. Accuracy in draw requests is essential for proper loan administration.
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 mortgage brokerage pays its MLOs a flat fee of $2,000 per closed loan, regardless of loan amount or terms. Additionally, the company pays a quarterly team bonus to all MLOs if the office meets certain customer satisfaction scores. Which statement is correct?
Next Question
A borrower asks their MLO about the risks of an adjustable-rate mortgage (ARM) they are considering. The MLO knows rates are likely to increase but tells the borrower rates will probably stay low. This behavior violates which principle?