A California real estate broker negotiates a hard money loan secured by a deed of trust on a residential property. Which disclosure obligation applies under California law?
Correct Answer
A) The broker must provide the borrower a Mortgage Loan Disclosure Statement under Business & Professions Code §10240 before the borrower signs any loan documents
Under California Business & Professions Code §10240, a real estate broker who negotiates any mortgage loan — including hard money loans — must deliver a Mortgage Loan Disclosure Statement (MLDS) to the borrower before the borrower signs any loan documents. The MLDS discloses loan terms, costs, and any compensation the broker will receive.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
The debt-to-income ratio (DTI) compares a borrower's monthly debt obligations to their gross monthly income. It is used by lenders to determine how much mortgage a borrower can afford.
In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.
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