Client Advisory & Consultation Flashcards
7 cards from real CRU practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Client Advisory & Consultation flashcards as text
Under ECOA, within how many days must a lender provide an adverse action notice to a denied applicant?
Answer: 30 days
ECOA requires lenders to provide a statement of specific reasons for adverse action within 30 days of a completed application.
A borrower's debt-to-income ratio is 46% on a conventional loan file. Which advisory action is most appropriate?
Answer: Advise the borrower their DTI may require compensating factors or a different loan product, as conventional loans typically cap at 45%
Most conventional guidelines cap DTI at 45% (some allow 50% with strong compensating factors), so the underwriter should discuss options or compensating factors with the borrower.
A client asks about the difference between a fixed-rate and an adjustable-rate mortgage in terms of long-term risk. What is the most accurate advisory statement?
Answer: A fixed-rate mortgage offers payment certainty, while an ARM may offer a lower initial rate but exposes the borrower to rate increases after the initial period
Fixed-rate loans provide payment stability, while ARMs offer initial savings but carry interest rate risk after the fixed period ends.
Which situation would trigger the right of rescission under the Truth in Lending Act?
Answer: A borrower refinancing their primary residence with a new lender
TILA's three-day right of rescission applies to refinances of primary residences with a new lender, giving borrowers time to cancel without penalty.
A borrower is considering using gift funds for their down payment. What must the underwriter verify and advise the client about?
Answer: A gift letter must confirm the funds are not a loan, and the donor and transfer must be documented per loan program guidelines
Loan guidelines require a signed gift letter stating no repayment is expected, plus documentation of the donor's ability to give and the transfer of funds.
What is the primary purpose of counseling a client about title insurance during the consultation process?
Answer: To explain that title insurance protects against claims arising from past ownership defects that could threaten the borrower's ownership
Title insurance protects the lender and/or owner from financial loss due to defects in title such as liens, fraud, or undisclosed heirs discovered after closing.
When a borrower is self-employed, which additional documentation requirement should the underwriter advise them to prepare?
Answer: Two years of personal and business tax returns, year-to-date profit and loss statement, and business bank statements
Self-employed borrowers must typically provide two years of both personal and business returns, a P&L, and business bank statements to verify stable income.