Is the "Net Tangible Benefit to Borrower" test a requirement in order to approve a conventional residential mortgage loan application? I'm not talking about a Fannie Refi-Plus or an FHA Streamline, which could very well have this stipulation in order to qualify for those programs. In certain states we lend in the borrower has to sign a disclosure that they believe they will receive a benefit in refinancing their loan. I have an underwriter asking me what should we do because she thinks the borrower isn't receiving "enough" of a benefit. I've been out of the underwriting world for a few years, but it seems to me (common sense wise) that we can't turn a borrower down just because they didn't pass a subjective tangible benefit test. I can't find anything regulatory related that includes passing a Net Tangible Benefit Test.

Help!

Those are usually State law issues.