An MLO discovers that a borrower's existing mortgage has a prepayment penalty of $12,000. The proposed refinance would save $150 per month in payments. What is the minimum payback period that would generally support tangible net benefit?
Correct Answer
C) The prepayment penalty plus closing costs must be recovered within a reasonable time
The tangible net benefit analysis must include all costs, including prepayment penalties. There's no specific timeframe mandated, but the total costs should be recovered within a reasonable period based on the monthly savings.
Why This Is the Correct Answer
The tangible net benefit analysis must include all costs, including prepayment penalties. There's no specific timeframe mandated, but the total costs should be recovered within a reasonable period based on the monthly savings.
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?
People Also Study
Federal Mortgage-Related Laws
23% of exam
General Mortgage Knowledge
23% of exam
Ethics, Fraud & Consumer Protection
17% of exam
Uniform State Test Content
12% of exam
Previous Question
When a construction loan requires a 'two-party check' system for draw payments, this means:
Next Question
A lender discovers that the borrower failed to disclose $25,000 in credit card debt during the application process. This discovery occurs 10 days after the initial Loan Estimate was provided. What is the maximum timeframe for providing a revised Loan Estimate?