During a disclosure desk review, an audit analyst encounters a Government Loan Programs issue. Which response should match the file facts to the correct rule?
Correct Answer
A) Check FHA occupancy and eligibility requirements
Why this is correct: Government loan programs (FHA, VA, USDA) have distinct and strict eligibility rules. For FHA loans, this includes owner-occupancy requirements and other borrower/ property eligibility criteria. The compliant step is to check these specific FHA requirements against the file facts to ensure the loan qualifies for the government program. Why the other choices are wrong: "Assume the Government Loan Programs condition is met because the borrower satisfied the separate servicing transfer requirement" is wrong because satisfying one rule (servicing transfer) does not automatically satisfy core eligibility rules like occupancy. "Ignore product, occupancy, LTV, or eligibility limits because the borrower prefers the loan" is wrong because government program rules are statutory and cannot be waived by borrower preference. "Use the same treatment for all mortgage products without comparing program requirements" is wrong because FHA, VA, and conventional loans have vastly different rules; applying a uniform standard would violate program guidelines. Exam tip: For government loans, always verify program-specific occupancy and eligibility rules first. FHA requires owner-occupancy for most loans.
Why This Is the Correct Answer
The correct response is "Check FHA occupancy and eligibility requirements" because FHA loans are HUD-insured loans governed by FHA policy and mortgage-insurance rules.
Why the Other Options Are Wrong
Option B: Assume the Government Loan Programs condition is met because the borrower satisfied the separate servicing transfer requirement.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Option C: Ignore product, occupancy, LTV, or eligibility limits because the borrower prefers the loan.
Ignore product, occupancy, LTV, or eligibility limits because the borrower prefers the loan. is not correct because it does not apply the rule tested by this file scenario.
Option D: Use the same treatment for all mortgage products without comparing program requirements.
Use the same treatment for all mortgage products without comparing program requirements. is not correct because it does not apply the rule tested by this file scenario.
Memory Technique
FHA loan-program requirements: identify the rule being tested, then choose the action that documents or applies that rule before the file moves forward.
Exam Tip
Match the file facts to FHA loan-program requirements; do not choose an exception or shortcut that skips the required rule.
Common Mistakes to Avoid
- -Choosing an internal exception instead of the governing rule
- -Treating preliminary or informal facts as a substitute for required documentation
- -Answering from a familiar but unrelated mortgage topic
More Mortgage Knowledge Questions
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A loan has an outstanding principal balance of $240,000 and a 6% annual interest rate. Using simple monthly accrual, how much interest accrues for one month?
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