Utah Personal Lending and Mortgages (PLM) Certification Practice Test 2026 - Free PLM Certification Practice Questions and Study Guide

In the scenario where a borrower refuses to disclose debts during a refinancing process, the most appropriate course of action is to refuse to originate the loan. Transparency regarding debts is crucial for accurately assessing a borrower's financial situation and ensuring responsible lending practices. Without a complete understanding of a borrower's obligations, the lender risks approving a loan that may not be in the best interest of either party.

Loan underwriters and mortgage professionals are required to evaluate the borrower's ability to repay the loan, which heavily relies on the full disclosure of financial information. If debts are concealed, it undermines this evaluation, potentially leading to financial jeopardy for both the borrower and the lender. Additionally, it is essential for compliance with various regulations that govern lending practices, which mandate full transparency from borrowers. Hence, refusing to originate the loan protects both the lending institution and the integrity of the lending process itself.