An underwriter discovers that a borrower's employment was terminated three days after the loan application was submitted, but before closing. What action should the underwriter take?
Correct Answer
B) Re-verify employment and assess the borrower's ability to repay
Under the Ability-to-Repay rule, lenders must verify employment within a reasonable time before closing. A job loss after application but before closing materially changes the borrower's ability to repay and requires re-evaluation of the loan. The underwriter must assess whether the borrower can still qualify based on their current financial situation.
Why This Is the Correct Answer
Under the Ability-to-Repay rule, lenders must verify employment within a reasonable time before closing. A job loss after application but before closing materially changes the borrower's ability to repay and requires re-evaluation of the loan. The underwriter must assess whether the borrower can still qualify based on their current financial situation.
More Mortgage Knowledge Questions
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A borrower asks about the difference between discount points and origination fees. What is the most accurate explanation?
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