A borrower intends to buy a 4-unit building purely as a rental, live nowhere near it, and finance it with her VA entitlement. An originator has to explain what the programme requires of her.
Correct Answer
B) Confirm VA eligibility and occupancy requirements
Why this is correct: VA loans are a distinct government program with core requirements separate from conventional loans. The original explanation correctly identifies that VA loans hinge on eligibility (based on the veteran's service) and occupancy (the property must be the borrower's primary residence). Before any team action, an audit analyst must verify these foundational program rules to ensure the loan is compliant and defensible. Why the other choices are wrong: "Apply conventional PMI rules instead of VA program requirements" is wrong because VA loans do not use private mortgage insurance (PMI); they use a guaranty. "Treat the VA Loan Programs review as complete because the file contains a related servicing transfer note" is wrong because a transfer note does not confirm that initial VA-specific requirements were met. "Ignore VA eligibility once credit and income are acceptable" is wrong because VA eligibility is a mandatory, separate program requirement, not an alternative to creditworthiness. Exam tip: For VA loan questions, always think: Veteran Eligibility + Primary Occupancy. These are non-negotiable first steps.
Why This Is the Correct Answer
The correct response is "Confirm VA eligibility and occupancy requirements" because VA-backed loans use VA eligibility, occupancy, guaranty, and funding-fee concepts.
Why the Other Options Are Wrong
Option A: Apply conventional PMI rules instead of VA program requirements.
Apply conventional PMI rules instead of VA program requirements. is not correct because it does not apply the rule tested by this file scenario.
Option C: Treat the VA Loan Programs review as complete because the file contains a related servicing transfer note.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Option D: Ignore VA eligibility once credit and income are acceptable.
Ignore VA eligibility once credit and income are acceptable. is not correct because it does not apply the rule tested by this file scenario.
Memory Technique
VA loan eligibility and occupancy: 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 VA loan eligibility and occupancy; 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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