Case Study
Please read the below case study and answer the following questions in the comments section below:
Tom has been a licensed MLO working for a lending company
called S & L Associates for about a year now. And, over that time, Tom has
been steadily locking down his own methods for closing loans. Let’s look at one
of his latest transactions as an example.
A borrower named Claire comes to Tom for a mortgage loan.
She was referred to him by her real estate agent Patricia—whom Tom has worked
with quite a few times. Tom takes Claire’s application and sends her on her
way.
Looking over her application, though, Tom sees that Claire
forgot to write down her annual income. Thinking back, Tom realizes that they
were talking a bit while she was filling out the application, about the home
she is trying to buy and how it had three bedrooms that she didn’t know if she
would have enough furniture to fill.
Nevertheless, she walked off without putting the income
figure on her application. Tom knows that, given the volume of loans right now,
it’s going to be a little tight time-wise submitting Claire’s application and
getting the appraisal done, etc., by the projected closing date. And, what’s
more, he has scheduled a remote hiking trip for the following week, so Tom will
be out of cell phone range and away from the Internet.
So, Tom racks his brain and remembers that Claire said that
she made $70,000 per year. So, he writes it in, and gets the materials ready
for underwriting.
While he is gone, Tom asks his buddy and co-worker Scott to
look after Claire’s file because Tom will be out of cell phone range and away
from Internet access. In exchange for his help, Tom will pay Scott $200 out of
the loan commission – just for keeping Claire’s loan on track.
Scott does not notice much of anything about any loans files
– including Claire’s – because, after fifteen years as an MLO, for the first
time, Scott’s license has not been renewed! In scrambling to deal with
reinstating his license, Scott forgets to keep tabs on Claire’s loan.
Nevertheless, a few weeks later, Claire’s loan is approved
and they go on to close on time.
And, even though he didn’t really do anything for Claire’s
loan, Tom decides to honor his promise to give Scott the $200 bonus for helping
out with Claire’s file. After all, Scott really needs the cash right now.
A year later, seeing that interest rates have dropped
significantly, Tom contacts Claire about possibly refinancing her mortgage.
After two weeks of phone tag, in which Tom lets Claire know that the rates
could swing back up, she finally decides to come in and talk about a refinance.
Sure enough, by the time Claire gets in to Tom’s office, the
rates aren’t quite as good as they were when he originally contacted her. Even
so, after running the numbers, Tom finds that Claire will still save $85 per
month on her mortgage payment with the refi! So, Claire applies to refinance
her mortgage (including her correct annual income and length of employment,
this time) and is approved.
Based on what you have just read please answer the following
questions:
1.
What did Tom do wrong regarding Claire’s
original loan application?
A.
Tom had Claire sign in the wrong color ink
B.
Tom had Claire sign while there was still a
blank field for where annual income went
C.
Tom had Claire sign unnecessary documents
D.
Tom did nothing wrong
2.
What, if anything, did Scott do wrong in this
situation?
A.
He wasn’t licensed as an MLO while watching
after Claire’s loan, therefore should not receive any commission from the loan
B.
He asked for too much money from Tom to watch
over the loan
C.
He misquoted the rate that Claire would be
receiving
D.
Scott really did nothing wrong in this situation
3.
Did Tom actually misrepresent the rate he quoted
Claire at when she refinanced?
A.
Yes, he told her what the rate would be on the
phone, yet the rate she actually received was higher
B.
Yes, he knew the rates were going to go up, but
neglected to tell her
C.
No, he explained what the rates where at the
time of their conversation, and also told her they could potentially increase,
nor did he use an advertisement when dealing with Claire
4.
Did Tom break any laws by refinancing Claire’s
loan?
A.
Yes, he advertised a specific rate to her and
then didn’t give her that rate when she was ready to refinance
B.
Yes, he neglected to warn her that rates could
swing back up
C.
No, Tom did not break any laws while refinancing
Claire’s loan
1. B. Tom had Claire sign while there was still a blank field for where annual income went
ReplyDelete2. A. He wasn’t licensed as an MLO while watching after Claire’s loan, therefore should not receive any commission from the loan
3. C. No, he explained what the rates where at the time of their conversation, and also told her they could potentially increase, nor did he use an advertisement when dealing with Claire
4. C. No, Tom did not break any laws while refinancing Claire’s loan