A loan officer at a Regulation P-covered lender tells an unaffiliated friend at a party that an identifiable neighbor has received a $340,000 mortgage approval. This information is nonpublic. The lender has not met the applicable notice-and-opt-out conditions, and no disclosure exception or consumer authorization applies. May the officer make this social disclosure?
Correct Answer
C) Improper: no permitted basis for this disclosure of nonpublic borrower information is established
C. The stated facts establish no permitted basis for sharing the nonpublic information. Identifiable application and financial-service information can be protected even before a loan closes. Regulation P restricts disclosure to unaffiliated third parties; the revised stem excludes both the ordinary disclosure conditions and exceptions. Scope and exceptions: Do not say approval information can never become public or that all external sharing is forbidden. Public availability, notices, opt-out choices and exceptions require their own analysis. Source: 1016.3(p), (q), (r) — https://www.consumerfinance.gov/rules-policy/regulations/1016/3/ 1016.10(a)–(b) — https://www.consumerfinance.gov/rules-policy/regulations/1016/10/
Why This Is the Correct Answer
C. The stated facts establish no permitted basis for sharing the nonpublic information. Identifiable application and financial-service information can be protected even before a loan closes. Regulation P restricts disclosure to unaffiliated third parties; the revised stem excludes both the ordinary disclosure conditions and exceptions. Scope and exceptions: Do not say approval information can never become public or that all external sharing is forbidden. Public availability, notices, opt-out choices and exceptions require their own analysis.
Why the Other Options Are Wrong
Option A: Proper, since the $340,000 is a matter of public record anyway
The stem expressly identifies the information as nonpublic.
Option B: Improper only where the neighbor learns of the disclosure later
The borrower’s later discovery is not a condition of the disclosure restriction.
Option D: Proper where the officer shares only 1 detail of the transaction
There is no one-detail exemption.
Exam Tip
Small disclosures still require a valid basis.
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