A self-employed borrower shows consistent monthly deposits of $12,000 in their business account but only claims $8,000 monthly income on their loan application. What should the MLO do?
Correct Answer
B) Require explanation of the discrepancy and additional income documentation
Discrepancies between bank deposits and stated income must be investigated and explained. The MLO needs to understand why deposits exceed claimed income - this could involve business expenses, loan proceeds, or other factors that don't represent actual income available for mortgage qualification.
Why This Is the Correct Answer
Discrepancies between bank deposits and stated income must be investigated and explained. The MLO needs to understand why deposits exceed claimed income - this could involve business expenses, loan proceeds, or other factors that don't represent actual income available for mortgage qualification.
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Previous Question
A borrower wants to use a construction-to-permanent loan to build a custom home on land they already own free and clear. During the construction phase, the borrower discovers significant rock formations requiring expensive excavation that will increase costs by $75,000. What is the most likely consequence?
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A borrower has a mortgage with mortgage insurance and wants to refinance to eliminate it. The new loan rate is 0.125% higher, but removing MI saves $200/month. How should this be evaluated for tangible net benefit?