When is it necessary for a mortgage loan originator to require the submission of documents to verify assets and income?

A mortgage loan originator (MLO) is required to obtain verification of assets and income during the loan application process to ensure that the borrower has the financial capacity to repay the loan. This verification is a critical part of the underwriting process and helps in assessing the creditworthiness of the borrower.

When an MLO requires this documentation at all times, it aligns with the regulatory and standard practices in mortgage lending. Accurately verifying a borrower's financial situation enhances the integrity of the lending process and helps prevent potential risks associated with lending to borrowers who may not be able to fulfill repayment obligations. This diligent approach is necessary across all types of loans, not limited to specific types like FHA loans or certain applicant risk levels.

In summary, requiring documentation to verify assets and income is a fundamental practice that ensures responsible lending and helps protect both the lender and the borrower, confirming that loans are made based on verified, accurate financial information.