What is the term used for when a lender requires a borrower to provide full financial disclosure?

The correct answer is due diligence. This term refers to the comprehensive process in which a lender assesses a borrower's financial situation by requiring full disclosure of financial information. During due diligence, the lender examines the borrower's income, assets, liabilities, and credit history to ensure that they have a clear understanding of the borrower's ability to repay the loan. This process helps mitigate risk for the lender and ensures that all necessary information is gathered before making a lending decision.

Verification of income specifically relates to the point in the due diligence process where the lender confirms the borrower's income sources and amounts, but it does not encompass the entire scope of financial disclosure that due diligence entails. Loan underwriting is the subsequent phase where the lender evaluates the risk of the loan based on the information gathered during due diligence. Loan origination refers to the overall process of creating a loan, which includes marketing, processing applications, and funding the loans but does not specifically address the detailed financial disclosure aspect.