Under the Ability-to-Repay (ATR) rule, what is the primary purpose of the tangible net benefit requirement for refinance transactions?
Correct Answer
C) To protect borrowers from serial refinancing that provides no meaningful benefit
The tangible net benefit requirement under 12 CFR 1026.43(e)(3) is designed to protect borrowers from abusive lending practices, particularly serial refinancing that strips equity without providing meaningful benefit to the borrower.
Why This Is the Correct Answer
The tangible net benefit requirement under 12 CFR 1026.43(e)(3) is designed to protect borrowers from abusive lending practices, particularly serial refinancing that strips equity without providing meaningful benefit to the borrower.
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Previous Question
A borrower's construction loan has a 12-month term, but construction is only 60% complete when the loan matures due to weather delays and permit issues. The borrower has been making interest-only payments on time. What typically happens next?
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When communicating with a borrower who has limited English proficiency, what is the MLO's primary obligation regarding disclosures?