Which practice would most clearly violate an MLO's duty of good faith and fair dealing?
Correct Answer
B) Steering a qualified borrower to a subprime loan to increase compensation
Steering a qualified borrower to a subprime loan solely to increase the MLO's compensation is a clear violation of good faith and fair dealing. This practice puts the MLO's financial interests above the borrower's best interests and involves dishonest dealing.
Why This Is the Correct Answer
Steering a qualified borrower to a subprime loan solely to increase the MLO's compensation is a clear violation of good faith and fair dealing. This practice puts the MLO's financial interests above the borrower's best interests and involves dishonest dealing.
More Origination Questions
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For a construction-to-permanent loan, when must the initial Closing Disclosure be provided for the construction phase?
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An MLO works for a lender that pays a salary plus commission. The commission structure pays 0.75% on the first $300,000 of loan amount and 1% on amounts above $300,000. This compensation plan is: