A joint applicant's credit report shows they are an authorized user on their spouse's account, which has excellent payment history. However, the spouse is not applying for the mortgage. How should this tradeline be evaluated?
Correct Answer
B) The tradeline can be used if it demonstrates creditworthiness
Authorized user tradelines can be considered in credit evaluation if they demonstrate the applicant's creditworthiness and management of credit obligations. The key is whether the tradeline reflects the applicant's credit behavior, not whether the primary account holder is on the loan.
Why This Is the Correct Answer
Authorized user tradelines can be considered in credit evaluation if they demonstrate the applicant's creditworthiness and management of credit obligations. The key is whether the tradeline reflects the applicant's credit behavior, not whether the primary account holder is on the loan.
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?
An MLO provides pre-qualification based on a borrower's current employment but learns the borrower is starting a new job next month with a $10,000 salary increase. How should this information be handled?
An MLO issues a pre-approval letter that states 'subject to satisfactory appraisal and final underwriting approval.' The borrower uses this letter to make an offer, but the appraisal comes in $15,000 below the purchase price. What is the lender's obligation?
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How long is a typical pre-approval letter valid?
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