An originator wants the anti-steering safe harbour on a 30-year fixed-rate file. She works regularly with 6 creditors and gathers quotes from 4 of them. Which loan options must she present to satisfy the loan-options component of Regulation Z's anti-steering safe harbor?
Correct Answer
C) Options covering lowest rate, lowest rate without the listed features, and lowest total discount/origination points or fees
C. Cover the three selection criteria, not a fixed number of lenders or distinct loans. Four regular creditors meets the three-creditor research minimum in this scenario. Fewer than three loans can suffice if they satisfy all criteria. The originator must reasonably believe the consumer likely qualifies. Scope and exceptions: The excluded features include negative amortization, prepayment penalties, interest-only payments, balloon payments in the first seven years, demand features and shared equity/appreciation. The lowest-fee tie goes to the lowest rate. Apply the criteria to each interested transaction type and highlight qualifying choices if presenting more than three. Source: Section 1026.36(e)(2)–(4); comment 36(e)(3)-1 — https://www.consumerfinance.gov/rules-policy/regulations/1026/36/
Why This Is the Correct Answer
C. Cover the three selection criteria, not a fixed number of lenders or distinct loans. Four regular creditors meets the three-creditor research minimum in this scenario. Fewer than three loans can suffice if they satisfy all criteria. The originator must reasonably believe the consumer likely qualifies. Scope and exceptions: The excluded features include negative amortization, prepayment penalties, interest-only payments, balloon payments in the first seven years, demand features and shared equity/appreciation. The lowest-fee tie goes to the lowest rate. Apply the criteria to each interested transaction type and highlight qualifying choices if presenting more than three.
Why the Other Options Are Wrong
Option A: Present 6 options, one from every single creditor she regularly works with
Research need not cover all six regular creditors.
Option B: Present 4 options, one from each creditor whose quote she obtained
One displayed option per quote is not the rule.
Option D: Present 3 options, all of which must come from 3 separate creditors
Presented options need not come from three different creditors.
Exam Tip
Distinguish research breadth, selection criteria and displayed loan count.
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