Loan Officer Practice Exam 2026 – Comprehensive All-in-One Guide for Exam Success!

Question: 1 / 415

Under a one-time construction close that has taken more than ___ to be completed, FNMA will require that the borrower pay a rate lock extension fee.

A) 6 months

B) 1 year

C) 4 months

In a one-time construction close loan, which allows borrowers to secure both the construction and permanent mortgage financing in a single transaction, FNMA (Fannie Mae) has specific requirements regarding rate lock extensions. If the construction takes more than 4 months to complete, FNMA mandates that the borrower pay a rate lock extension fee. This requirement is in place to ensure that the lender is protected against fluctuations in interest rates during extended construction periods.

The decision to enforce a fee after a 4-month period reflects the standard time often expected for many construction projects, indicating that any delays beyond this timeframe can expose lenders to market risks. Thus, understanding this timeframe is crucial for borrowers to manage their expectations and financing costs effectively.

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D) 9 months

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