A mortgage loan originator receives a loan application from a borrower who clearly does not qualify for the loan program they are requesting. What is the MLO's obligation under the duty of good faith and fair dealing?
Correct Answer
B) Inform the borrower that they do not qualify and suggest alternative loan programs if available
Under the SAFE Act and general duty of good faith and fair dealing, MLOs must act honestly and provide borrowers with accurate information about their loan options. This includes informing borrowers when they don't qualify and suggesting suitable alternatives when possible.
Why This Is the Correct Answer
Under the SAFE Act and general duty of good faith and fair dealing, MLOs must act honestly and provide borrowers with accurate information about their loan options. This includes informing borrowers when they don't qualify and suggesting suitable alternatives when possible.
More Origination Questions
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A borrower obtained a conventional loan with PMI three years ago. The current loan balance is $185,000 and the original property value was $250,000. A new appraisal shows the property is now worth $280,000. Under the Homeowners Protection Act, what action must the lender take?