Mortgage Loan Originator (MLO) Licensing Practice Test

Question: 1 / 605

Can Loan Prospector (LP) be used for various loan types, including Commercial loans?

Yes, for all loan types

No, it can't be used for any loans

Yes, for Conventional, VA, and FHA loans but not Commercial

Loan Prospector (LP) is a technology tool developed by Freddie Mac that serves as an automated underwriting system primarily designed for use with specific types of residential mortgage loans. The correct understanding is that LP can process Conventional, VA, and FHA loans effectively. However, it is not equipped or intended for use with commercial loans.

The key distinction lies in the fact that commercial lending operates within a different framework compared to the conventional residential loans that LP is designed to handle. The guidelines, criteria, and risk assessment employed in commercial lending differ significantly from those applicable to residential lending. Therefore, while LP offers significant assistance for certain residential loan types, it does not extend to commercial loans, which is why the answer correctly identifies this limitation.

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Only for FHA loans

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