An MLO learns that a borrower is elderly and may not fully understand the complex terms of a reverse mortgage they are applying for. What does good faith and fair dealing require?
Correct Answer
C) Take extra time to ensure the borrower understands the loan terms and consequences
Good faith and fair dealing requires MLOs to ensure borrowers understand their loan terms, especially when dealing with vulnerable populations or complex products like reverse mortgages. This may require additional explanation and verification of understanding.
Why This Is the Correct Answer
Good faith and fair dealing requires MLOs to ensure borrowers understand their loan terms, especially when dealing with vulnerable populations or complex products like reverse mortgages. This may require additional explanation and verification of understanding.
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?
An MLO provides pre-qualification based on a borrower's current employment but learns the borrower is starting a new job next month with a $10,000 salary increase. How should this information be handled?
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?
A borrower submits a mortgage application on Monday at 2:00 PM. The lender determines the application is complete on Wednesday at 10:00 AM. What is the latest day the Loan Estimate must be delivered to comply with TRID requirements?
How long is a typical pre-approval letter valid?
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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A borrower calls and provides verbal information about their income, debts, and down payment. Based on this information, the MLO tells them they could qualify for a $300,000 loan. This process is best described as:
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An appraiser calls an MLO to verify property details such as the number of bedrooms and bathrooms listed on the loan application. How should the MLO respond?