Mortgage Loan Originator (MLO) Licensing Practice Test

Question: 1 / 605

What is the purpose of the anti-coercion statement for mortgage loan applicants?

To confirm compliance with loan terms

To verify financial stability

To demonstrate freedom from coercion in obtaining insurance

The anti-coercion statement serves to ensure that mortgage loan applicants are free from any undue pressure or influence when securing a mortgage. This is crucial in maintaining ethical lending practices and protecting the rights of applicants. By demonstrating freedom from coercion, the statement affirms that the applicants have made their financial decisions independently and without external threats or incentives that might skew their judgment.

While confirming compliance with loan terms, verifying financial stability, and assessing creditworthiness are all important aspects of the mortgage process, they do not specifically address the issue of coercion. The anti-coercion statement is particularly focused on empowering the borrower, ensuring they are entering into the loan agreement willingly and informed, making it a critical component of consumer protection in the lending landscape.

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To assess creditworthiness

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