West Virginia Mortgage Law Practice Test

A mortgage loan originator is permitted to:

1. Advise a borrower to fabricate information

2. Explain to a borrower that a different loan product may better suit his/her financial circumstances

3. Offer loans exclusively to friends and family

4. Propose loan products without proper licensure

The correct answer is: Advise a borrower to fabricate information

A mortgage loan originator is not permitted to advise a borrower to fabricate information. This action is unethical and illegal, as it undermines the integrity of the mortgage lending process and can lead to serious legal consequences for both the originator and the borrower. Ensuring that all information provided in a loan application is accurate and truthful is critical for compliance with federal and state regulations. In contrast, it is acceptable for a mortgage loan originator to explain to a borrower that a different loan product may better suit their financial circumstances. This promotes responsible lending practices and helps consumers make informed decisions based on their unique financial situations. Offering loans exclusively to friends and family can raise concerns about ethical practices and potential conflicts of interest, making it a questionable practice, while proposing loan products without the necessary licensure is illegal and violates regulatory requirements. Thus, the appropriate actions align with the principle of providing accurate information and guidance that serves the best interest of the borrower.