For each loan type the consumer requests, an originator reviews options from a significant number of regular creditors and reasonably believes the consumer qualifies for the options shown. Which presentation meets the required option categories for the anti-steering safe harbor?
Correct Answer
B) The lowest-rate option, the lowest-rate option without the specified risky features, and the option with the lowest total discount points, origination points or origination fees
B. Use the safe harbor’s rate, restricted-feature rate and specified points/fees categories. For each transaction type of interest, identify the lowest-rate loan, the lowest-rate loan without the listed features, and the loan minimizing the specified origination and discount charges. The originator must also reasonably believe the consumer likely qualifies. Three arbitrary loans do not meet those requirements. Scope and exceptions: For the restricted-feature category, exclude negative amortization, prepayment penalties, interest-only payments, balloon payments in the first seven years, demand features, shared equity and shared appreciation. Reverse mortgages use the separate list in 1026.36(e)(3)(i)(B). A tie for lowest specified points/fees is resolved by the lowest interest rate. One loan may satisfy multiple categories; highlight the qualifying choices if presenting more than three. Source: 1026.36(e)(3)(i)–(iii), (e)(4) — https://www.consumerfinance.gov/rules-policy/regulations/1026/36/
Why This Is the Correct Answer
B. Use the safe harbor’s rate, restricted-feature rate and specified points/fees categories. For each transaction type of interest, identify the lowest-rate loan, the lowest-rate loan without the listed features, and the loan minimizing the specified origination and discount charges. The originator must also reasonably believe the consumer likely qualifies. Three arbitrary loans do not meet those requirements. Scope and exceptions: For the restricted-feature category, exclude negative amortization, prepayment penalties, interest-only payments, balloon payments in the first seven years, demand features, shared equity and shared appreciation. Reverse mortgages use the separate list in 1026.36(e)(3)(i)(B). A tie for lowest specified points/fees is resolved by the lowest interest rate. One loan may satisfy multiple categories; highlight the qualifying choices if presenting more than three.
Why the Other Options Are Wrong
Option A: Any three loans with identical lender-paid compensation
Equal originator compensation is not the listed option-selection test.
Option C: Only the loan with the lowest total monthly payment
Lowest monthly payment is not a substitute for the prescribed categories.
Option D: Three loans from three different creditors, regardless of their rates or features
Using three lenders alone does not satisfy product-selection and likely-qualification requirements.
Exam Tip
The safe harbor concerns qualifying loan characteristics, not simply displaying three offers.
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