West Virginia Mortgage Law Practice Test

When a borrower does not qualify for the loan for which he or she initially applies, but a materially different product is available, all of the following must be done, EXCEPT:

1. Disclosures for the alternative product must be provided

2. New terms must be offered

3. Proper notice and disclosure must be provided

4. Tangible net benefit worksheet must be completed

The correct answer is: Disclosures for the alternative product must be provided

In the scenario where a borrower does not qualify for their initially requested loan and an alternative product is available, the process is guided by regulatory requirements that ensure borrowers are informed and treated fairly. Providing disclosures for the alternative product is essential to keep the borrower informed of the key features, risks, and terms associated with the new loan option. This allows the borrower to make an informed decision, and it is a critical part of ensuring transparency throughout the lending process. Offering new terms is necessary as it demonstrates that the lender is attempting to accommodate the borrower's needs through a different product that fits their situation better. This includes providing a clear understanding of how these new terms differ from the initial loan application. Proper notice and disclosure are typically required to ensure that the borrower is aware of their options and any changes to their loan process, reinforcing the lender's obligation to promote informed financial decisions. However, completing a tangible net benefit worksheet may not be mandatory in all cases, especially if it does not directly apply to the type of loan being considered or may not be relevant under certain conditions. This worksheet is often used in the context of refinancing to evaluate if the borrower will receive a significant financial advantage, but it is not universally required for every new loan product presented to a borrower