A borrower qualifies for a conventional loan at 6.9% and is placed in a covered loan at 11.4% that pays the broker more. Does the borrower’s acceptance of disclosures justify steering into the higher-cost covered loan for greater compensation?
Correct Answer
C) Steering into a covered loan the borrower did not need is what the Act reaches
Placing a borrower who qualifies for better terms into a covered loan, where the originator is paid more for doing so, is the conduct the covered-loan provisions and the federal anti-steering rule both address. Other choices: signing disclosures records the terms rather than justifying the placement; speed is not a defense to steering; and the wrong is complete at placement. Source: Cal. Fin. Code § 4973; 12 CFR 1026.36(e)
Why This Is the Correct Answer
Placing a borrower who qualifies for better terms into a covered loan, where the originator is paid more for doing so, is the conduct the covered-loan provisions and the federal anti-steering rule both address. Other choices: signing disclosures records the terms rather than justifying the placement; speed is not a defense to steering; and the wrong is complete at placement. Source: Cal. Fin. Code § 4973; 12 CFR 1026.36(e)
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