A file is priced as a jumbo, then repriced as conforming a week later when someone looks up the county. The rate difference is 0.5%. What should have happened at the start?
Correct Answer
D) Check high-cost-area limits before classifying the loan
Why this is correct: GSE (Fannie Mae and Freddie Mac) standards for manufactured housing include specific requirements for the home's construction (HUD Code), permanent foundation, and titling. A key step in applying these standards is to determine the correct loan classification, which depends on the loan amount relative to the FHFA conforming loan limits, including higher limits for designated high-cost areas. Why the other choices are wrong: "Treat the GSE Manufactured Housing Standards review as complete because the file contains a related high-cost loan note" is wrong because a note about a high-cost loan (HOEPA) is unrelated to GSE property and loan limit standards. "Ignore product, occupancy, LTV, or eligibility limits because the borrower prefers the loan" is wrong because GSE eligibility rules are mandatory. "Use the same treatment for all mortgage products without comparing program requirements" is wrong because manufactured housing has unique requirements compared to site-built homes. Exam tip: For GSE manufactured housing loans, ensure the home meets property standards and check the loan amount against the correct conforming loan limit for the area.
Why This Is the Correct Answer
The correct response is "Check high-cost-area limits before classifying the loan" because FHFA conforming loan limits define maximum principal amounts for Fannie Mae and Freddie Mac acquisition.
Why the Other Options Are Wrong
Option A: Treat the GSE Manufactured Housing Standards review as complete because the file contains a related high-cost loan note.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Option B: 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 C: 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
conforming loan limits: 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 conforming loan limits; 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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