Mortgage Loan Originator (MLO) Licensing Practice Test

Disable ads (and more) with a membership for a one time $2.99 payment

Prepare for the Mortgage Loan Originator (MLO) Licensing Test. Study with flashcards and multiple-choice questions, each with hints and explanations. Get ready to succeed on your exam!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.


Is a deed in lieu considered a loss mitigation option?

  1. Yes

  2. No

  3. Only in default scenarios

  4. Only for government-backed loans

The correct answer is: Yes

A deed in lieu of foreclosure is indeed considered a loss mitigation option because it allows a homeowner who is struggling to make mortgage payments to voluntarily transfer the title of their property to the lender. This process can help both parties avoid the lengthy and costly process of foreclosure. The homeowner can mitigate the damage to their credit score and may also have the opportunity to negotiate the terms of the transaction to minimize their financial burden. Loss mitigation encompasses a variety of strategies that lenders and borrowers can utilize to avoid foreclosure, and a deed in lieu is one of these viable strategies. It is a beneficial option for borrowers as it can lead to a less severe impact on their financial standing compared to foreclosure, which can be more damaging and drawn out. Therefore, identifying the deed in lieu as a loss mitigation option is accurate. The other options refer to circumstances that limit or define the applicability of a deed in lieu. However, a deed in lieu is a general loss mitigation solution that is not restricted solely to situations of default or specific loan types.