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. A tangible net benefit worksheet must be completed

2. Disclosures for the alternative product must be provided

3. New terms must be offered

4. Proper notice and disclosure must be provided

The correct answer is: A tangible net benefit worksheet must be completed

In situations where a borrower does not qualify for their initial loan application but a different loan product is available, it is critical for lenders to follow specific protocols for compliance and good practice. The correct answer indicates that completing a tangible net benefit worksheet is not a requirement in this scenario. The tangible net benefit worksheet is typically used to demonstrate the financial advantages a borrower will receive from the loan they are being offered. However, when a borrower is being presented with an alternative product due to their initial loan denial, the focus shifts to ensuring that all necessary disclosures and terms related to the new loan option are adequately communicated. Providing disclosures for the alternative product, offering new terms, and ensuring proper notice are all essential steps that protect the borrower by offering clarity on the loan they may receive instead. These steps ensure that the borrower is fully informed about the loan they are considering and that they understand any differences in terms, interest rates, and other relevant factors. In contrast, the tangible net benefit worksheet specifically may not be mandatory in this instance, as it is more relevant for refinancing scenarios or when evaluating the benefits of a particular loan compared to another, rather than for new options presented after a denial.