MI State Law Assignment 2 of 2

Please read the case study below and answer the following multiple-choice questions in the Comments Section below.

After months of house hunting, Jessica has found the perfect home, but now she needs a loan and needs to know what she qualifies for.  Jessica is a little naïve about mortgage products and decided she needed professional help from a mortgage broker.  Jessica walked into Best Bet Mortgages of Michigan hoping to find what she was looking for.  Jessica is met by Jeff, one of the brokers of the firm who is eager to help.  Jessica makes it known to Jeff that she has trouble understanding mortgage products, but Jeff insures her that he will act in her best interest.  Jessica lets Jeff know that she just graduated college and started a new career making $45,000 a year; however Jessica has $5,000 in credit card debt and $30,000 in student loan debt that she will have to begin paying on in 6 months.

Jeff assures her that this won’t be a problem that she makes more than enough to qualify on her own and in fact she is an ideal candidate for a fixed-rate loan of 2%.  Jessica can’t believe what she is hearing and is eager to lock this deal down.  Jeff tells her that he needs her to fill out a few forms to get her moving in the right direction.  When Jessica takes the forms, she notices that they are mostly blank.  Wanting to make sure that there wasn’t a mistake she tells Jeff that the forms are blank and asks him what they are used for.  Jeff tells her not to worry about the blanks as he will fill them in for her later and assures her this is standard procedure.  Satisfied with Jeff’s response the woman signs the forms and hands them back to Jeff.  Jessica leaves the office with a promise from Jeff that she will be hearing from him soon.

When Jessica leaves, Jeff begins to look at the forms.  Knowing that Jessica’s debt could be a potential problem he decides to put down that Jessica earns $55,000 a year.  Furthermore, Jeff decides to leave the student loan debt off the forms as well as he believes it should not count against her current income because doesn’t have to start paying them off for another six months.  Finally, Jeff fills in that Jessica will actually be receiving a 5% Adjustable Rate Mortgage, not the 2% fixed rate that she was promised.

There are a few questions to be asked here….

1. Is it ok for Jeff to assure Jessica that she makes more than enough to qualify for a loan before verifying if this is true?

A.    No, according to MI law a person shall not make a misleading statement about a borrower’s ability to qualify for a loan without verifying that they will secure repayment of the mortgage loan

B.    No, the only person who can tell a borrower that they qualify for a loan is the real estate agent

C.   Yes, MI law allows this

D.   None of the above

2. Is it a violation that Jessica was given blank forms to sign?

A.    No, Michigan has no laws about blank forms

B.    Yes, according to MI law a mortgage note shall not contain blanks to be filled in after it has been signed by the borrower

C.   Yes, because Jessica would never qualify for the loan and should have never been given the form

D.   No, Jeff told Jessica that he would be filling in blanks for her

3. Is Jeff allowed to change Jessica’s income on the forms?

A.    Yes, Jessica told Jeff to do what needed to be done to get the loan closed and Jeff is just acting in her best interest

B.    No, he didn’t get Jessica’s consent

C.   No, a lender shall not change or insert information on an application for a mortgage loan if they know that information to be false

D.   Yes, a lender is allowed to change information on a loan application in Michigan

4. Has Jeff committed any other prohibited acts regarding Jessica’s application?

A.    No, Jeff did everything else correctly

B.    Yes, he switched the rate and type of loan offered

C.   Yes, he didn’t get Jessica’s consent before committing these offenses

D.   No, Jessica gave him consent to make the switch

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