Class Blog (1 of 1)
Case Study: Always Help the Borrower
The market is extremely volatile and seems to be changing
daily. There is no insurance from one day to the next that loan programs or
relied upon underwriting guidelines will be around for a day, a week, or a
month. A mortgage loan originator (MLO) took an application two (2) days ago,
and the borrowers’ credit score came back at 613. The minimum credit score
allowed under the loan program the MLO was attempting to secure for the
borrowers was six hundred and twenty (620). Seven (7) points is not that much of
a hurdle to repair, so the MLO decided that it was his responsibility to hold
off on telling the borrowers their score and get to work on helping them
improve a few accounts impacting the scores. The MLO also didn’t want the
borrowers to get cold feet if he were to tell them their credit score is less
than acceptable. Two weeks later, the MLO ran the credit report again after
having the borrowers write a few letters and contact a few creditors.
SUCCESS—the borrowers’ credit score increased to six hundred and twenty-three
(623), but sadly, the loan program was pulled by the investor.
Did the MLO do the right thing by working hard to improve
the borrowers’ credit score even though they now can’t get the loan?
www.mymortgagetrainer.com
www.mymortgagetrainer.com
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ReplyDeleteWhile the actions of the MLO were done with good intention, the MLO only needed to provide the credit score(s) with 4 factors that outlined why they received that score. The MLO cannot be held reliable for the information they provide, so they should have just provided the scores, the factors, and suggested they reapply for a loan when the score meets the minimum requirements.
Its good for the MLO to go out of their way to try and help but in this circumstance the MLO violated the FACTA act provisions requiring disclosure when they were readily available.
ReplyDeleteI believe by not disclosing the credit score to the consumer, this MLO violated the FACTA requirements to disclose this information within the required number of days. It would have been better for the MLO to bring the borrowers in on this circumstance so it would have been more collaborative rather than the MLO taking all of the responsibility as well.
ReplyDeleteThe MLO should have disclosed the credit score to the borrower and kept them informed not only of his intention to help them raise their score, but of the risk that the program they were applied for might not be available in the future.
ReplyDeleteAlthough intentions were good and they worked "hard" to help the consumer. They should have disclosed the borrowers score and the key factors to them and stated that they should reapply after the factors had been taken care of.
ReplyDeleteAn MLO should always disclose the credit report to the consumer and then work with both the client in trying to repair their credit and and the lender on possible other options to extend the loan program to a later date or a new loan program.
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ReplyDeleteThe MLO had good intentions but regardless had violated FACTA provisions
Its always good to help our borrowers but in this case the MLO violated FACTA Act provisions
ReplyDelete