Which step must occur before an MLO can close on a loan?

Before a mortgage loan originator (MLO) can close on a loan, it is essential to obtain a final underwriting approval. This step is critical because underwriting is the process where a lender assesses the risk of lending money to a borrower. The underwriter examines various factors, including the borrower's creditworthiness, appraisal, and overall loan eligibility. Final underwriting approval signifies that the underwriter has reviewed all necessary documentation and has determined that the loan meets the lender’s guidelines and risk criteria, allowing the closing process to proceed.

While the other options are important components in the loan process, they do not directly precede the closing step in the same way that final underwriting approval does. An appraisal of the property ensures that it is worth the amount being financed, verification of the borrower's income confirms their ability to repay the loan, and sending closing disclosures to all parties is part of the final preparations before closing. However, without the final underwriting approval, the loan cannot be officially cleared for closing, thus making it a prerequisite for moving forward.