During a loan application review, an MLO notices that a borrower's debt-to-income ratio will likely result in loan denial. The borrower mentions they have additional unreported income from a side business. What is the MLO's ethical obligation?
Correct Answer
A) Advise the borrower to report the additional income and provide proper documentation
The MLO's fiduciary duty includes helping borrowers present a complete and accurate financial picture. Advising proper documentation of legitimate income serves the borrower's best interest while maintaining loan integrity. This approach aligns with SAFE Act requirements for honest dealing and acting in the borrower's best interest.
Why This Is the Correct Answer
The MLO's fiduciary duty includes helping borrowers present a complete and accurate financial picture. Advising proper documentation of legitimate income serves the borrower's best interest while maintaining loan integrity. This approach aligns with SAFE Act requirements for honest dealing and acting in the borrower's best interest.
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Previous Question
Which of the following is NOT one of the three main categories of prohibited conduct under UDAAP?
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A mortgage company implements a policy where loan officers receive higher commissions for steering borrowers away from lower-cost government loan programs toward higher-cost conventional loans, even when borrowers qualify for the government programs. The company argues this is acceptable because they still offer government programs. Under UDAAP principles, this compensation structure: