A processor discovers that the borrower's bank statements show regular monthly deposits labeled 'rental income' but no rental property is disclosed on the loan application. What is the most critical next step?
Correct Answer
B) Investigate the source and nature of these deposits
Undisclosed income sources require investigation to determine their nature and whether they represent actual rental income from an undisclosed property, which would require additional documentation and potentially affect the borrower's debt obligations and qualifying ratios.
Why This Is the Correct Answer
Undisclosed income sources require investigation to determine their nature and whether they represent actual rental income from an undisclosed property, which would require additional documentation and potentially affect the borrower's debt obligations and qualifying ratios.
More Mortgage Knowledge Questions
A borrower is comparing two loan offers: Loan A has no points and 4.5% interest rate, Loan B has 2 points and 4.0% interest rate. The loan amount is $400,000. How much will the borrower pay upfront for the points on Loan B?
A lender charges a 1% origination fee on all loans. For a borrower obtaining a $250,000 mortgage, what is the maximum origination fee that can be charged without violating the points and fees test under the ATR/QM rule for a first-lien mortgage?
Under what circumstances can a Qualified Mortgage include a prepayment penalty?
A borrower is considering paying discount points to reduce their interest rate. Each point costs 1% of the loan amount and reduces the rate by 0.25%. On a $300,000 loan, how much would the borrower pay for 2 discount points?
A borrower asks about the difference between discount points and origination fees. What is the most accurate explanation?
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