A compliance review finds that a trainee asks which official source controls FHA single-family origination policy. What should the MLO do next?
Correct Answer
B) Use HUD Handbook 4000.1 for FHA single-family policy
Why this is correct: The governing concept is that FHA single-family origination policy is officially controlled by HUD Handbook 4000.1. This handbook consolidates all FHA requirements, and MLOs must use it as the primary source, not internal overlays or other documents. The correct action is to direct the trainee to this official handbook. Why the other choices are wrong: "Treat the Government mortgage program basics FHA review as complete because the file contains a related income calculation note" is wrong because a single note does not satisfy the requirement to use the official policy source. "Ignore product, occupancy, LTV, or eligibility limits because the borrower prefers the loan" is wrong because borrower preference does not override FHA program rules. "Use the same treatment for all mortgage products without comparing program requirements" is wrong because different loan programs (e.g., FHA vs. conventional) have distinct rules that must be followed. Exam tip: For any question about the official source for FHA policy, the answer is always HUD Handbook 4000.1.
Why This Is the Correct Answer
The correct response is "Use HUD Handbook 4000.1 for FHA single-family policy" because Lines 143-149; HUD FHA Handbook 4000.1 information page.
Why the Other Options Are Wrong
Option A: Treat the Government mortgage program basics FHA review as complete because the file contains a related income calculation note.
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
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