An MLO issues a pre-approval letter that states 'subject to satisfactory appraisal and final underwriting approval.' The borrower uses this letter to make an offer, but the appraisal comes in $15,000 below the purchase price. What is the lender's obligation?
Correct Answer
C) Require the borrower to make up the difference in cash or renegotiate the price
Pre-approval letters typically include conditions such as satisfactory appraisal. When the appraisal comes in below purchase price, it affects the loan-to-value ratio and collateral adequacy. The borrower must either provide additional down payment to maintain the LTV ratio or renegotiate the purchase price.
Why This Is the Correct Answer
Pre-approval letters typically include conditions such as satisfactory appraisal. When the appraisal comes in below purchase price, it affects the loan-to-value ratio and collateral adequacy. The borrower must either provide additional down payment to maintain the LTV ratio or renegotiate the purchase price.
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For a construction-to-permanent loan, when must the initial Closing Disclosure be provided for the construction phase?
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A borrower's financial situation has significantly improved since their initial loan application, making them eligible for better loan terms. The MLO's duty of good faith and fair dealing requires: