During the application process, an MLO realizes that a borrower would qualify for a government program with better terms, but the MLO's company doesn't offer that program type. What does good faith require?
Correct Answer
B) Inform the borrower about the government program and their options
Good faith dealing requires MLOs to act in the borrower's best interest, which includes informing them of potentially beneficial programs even if the MLO cannot originate those loans. This ensures the borrower can make a fully informed decision.
Why This Is the Correct Answer
Good faith dealing requires MLOs to act in the borrower's best interest, which includes informing them of potentially beneficial programs even if the MLO cannot originate those loans. This ensures the borrower can make a fully informed decision.
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?
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Previous Question
During a construction loan inspection, the lender discovers that the contractor has installed windows that do not meet the energy efficiency specifications outlined in the approved construction plans. The contractor claims the windows are 'equivalent quality.' What should the MLO advise?
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A mortgage broker discovers that an appraiser they frequently use has been providing consistently high valuations that help deals close. The broker never directly instructs the appraiser on value but continues to use this appraiser exclusively. Under AIR, this practice is: