An MLO is reviewing procedures for a case where the file has borrower statements but no verified ability-to-repay analysis. What is the proper handling?
Correct Answer
A) Verify repayment ability before consummation using reliable records
Lines 207-214; 12 CFR 1026.43(c)(1). The ATR rule requires a pre-consummation determination based on reliable information, not unsupported statements or collateral alone. Therefore, the correct response is "Verify repayment ability before consummation using reliable records".
Why This Is the Correct Answer
Lines 207-214; 12 CFR 1026.43(c)(1). The ATR rule requires a pre-consummation determination based on reliable information, not unsupported statements or collateral alone. Therefore, the correct response is "Verify repayment ability before consummation using reliable records".
More Origination Questions
A branch manager asks about a loan file because a processor wants to omit known monthly obligations from underwriting. What should happen?
In a mortgage origination file, the person preparing the valuation would be paid more if the value is higher. Which action should be taken?
An MLO is reviewing procedures for a case where the person preparing the valuation would be paid more if the value is higher. What is the proper handling?
A quality-control reviewer flags a case because the person preparing the valuation would be paid more if the value is higher. What correction is appropriate?
Before closing, the team discovers that a processor wants to omit known monthly obligations from underwriting. What is the safest compliant answer?
A compliance review finds that the consumer locks the interest rate after the initial disclosure package. What should the MLO do next?
A borrower-facing employee is unsure what to do when a processor wants to omit known monthly obligations from underwriting. What is the correct response?
An MLO is reviewing procedures for a case where a HELOC will provide funds for the down payment on the same dwelling. What is the proper handling?
A quality-control reviewer flags a case because a HELOC will provide funds for the down payment on the same dwelling. What correction is appropriate?
During intake, a manager proposes higher pay for loans with a higher interest rate. What is the best compliant response?
People Also Study
Federal Mortgage-Related Laws
24% of exam
General Mortgage Knowledge
20% of exam
Ethics, Fraud & Consumer Protection
18% of exam
Uniform State Test Content
11% of exam