An MLO issues a pre-approval letter valid for 90 days. On day 85, the borrower's credit score drops 40 points due to a new credit inquiry and increased credit utilization. What should the MLO do?
Correct Answer
C) Re-evaluate the borrower's creditworthiness and potentially revise the pre-approval
Pre-approval letters typically include conditions that material changes in financial circumstances may affect the approval. The MLO has a duty to ensure continued compliance with lending guidelines and the Ability-to-Repay rule, which requires consideration of current creditworthiness.
Why This Is the Correct Answer
Pre-approval letters typically include conditions that material changes in financial circumstances may affect the approval. The MLO has a duty to ensure continued compliance with lending guidelines and the Ability-to-Repay rule, which requires consideration of current creditworthiness.
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A borrower requests a rate lock on a construction-to-permanent loan where the construction phase is 8 months and the permanent phase begins immediately after. The lender's rate lock policy allows maximum 120-day locks. How should the MLO handle this situation?
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