An MLO provides a borrower with a pre-qualification estimate without running credit or verifying income. Three months later, the borrower applies for a loan and is denied due to recent credit issues. The borrower claims the MLO misled them. What is the MLO's best defense?
Correct Answer
C) Pre-qualification is based on unverified information and subject to actual verification
MLOs should clearly communicate that pre-qualification estimates are based on unverified, self-reported information and are subject to actual credit, income, and asset verification. Proper disclosure of the preliminary nature of pre-qualification protects both the lender and borrower.
Why This Is the Correct Answer
MLOs should clearly communicate that pre-qualification estimates are based on unverified, self-reported information and are subject to actual credit, income, and asset verification. Proper disclosure of the preliminary nature of pre-qualification protects both the lender and borrower.
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Previous Question
A borrower's Loan Estimate shows a $400 flood determination fee in the 'Services Borrower Cannot Shop For' section. At closing, the actual fee is $425. The lender did not shop for this service. What is the result?
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In a construction loan scenario, what happens if the actual construction costs exceed the original loan amount?