A lender's mobile app prominently displays a 'pre-qualification' feature that asks for minimal information but generates loan amount estimates that are consistently 20-30% higher than what borrowers actually qualify for when they complete full applications. The app includes a disclaimer that estimates are 'subject to full underwriting.' This practice is most likely:
Correct Answer
B) Deceptive because the estimates create unrealistic expectations despite the disclaimer
This practice is likely deceptive under UDAAP because the consistently inflated estimates create unrealistic expectations about borrowing capacity. Even with disclaimers, the material misleading nature of the estimates that are systematically overstated by 20-30% creates false impressions that could influence consumer behavior and decisions.
Why This Is the Correct Answer
This practice is likely deceptive under UDAAP because the consistently inflated estimates create unrealistic expectations about borrowing capacity. Even with disclaimers, the material misleading nature of the estimates that are systematically overstated by 20-30% creates false impressions that could influence consumer behavior and decisions.
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Previous Question
An applicant provides paystubs showing gross monthly income of $7,200, but their W-2 from the same employer shows annual wages of $52,000. Assuming the paystubs represent bi-weekly pay, what discrepancy exists?
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An MLO notices that a borrower's employment verification letter appears to have been altered. The borrower insists it's legitimate. What should the MLO do?