A lender relies on Regulation P's annual privacy-notice exception. It then changes policies about disclosing nonpublic personal information that it described in its most recent privacy notice. Can it continue relying on that exception solely because its sharing remains within an applicable exception?
Correct Answer
B) No: unchanged disclosure policies and practices are a separate condition of the annual-notice exception
B. Qualifying sharing alone is insufficient to retain the annual-notice exception. The exception has two conditions: specified excepted sharing and unchanged relevant disclosure policies and practices. Changing those previously disclosed policies defeats the second condition even if sharing remains within an exception. Scope and exceptions: An unrelated internal change need not defeat the exception. If the change does not require a revised notice under section 1016.8, an annual notice is due within 100 days; otherwise the revised notice is treated as initial for annual timing. The exception can become available again when its conditions are satisfied. Source: Section 1016.5(e)(1)–(2) — https://www.consumerfinance.gov/rules-policy/regulations/1016/5/
Why This Is the Correct Answer
B. Qualifying sharing alone is insufficient to retain the annual-notice exception. The exception has two conditions: specified excepted sharing and unchanged relevant disclosure policies and practices. Changing those previously disclosed policies defeats the second condition even if sharing remains within an exception. Scope and exceptions: An unrelated internal change need not defeat the exception. If the change does not require a revised notice under section 1016.8, an annual notice is due within 100 days; otherwise the revised notice is treated as initial for annual timing. The exception can become available again when its conditions are satisfied.
Why the Other Options Are Wrong
Option A: No: the annual-notice exception never exists
The regulation expressly provides an annual-notice exception.
Option C: Yes: any excepted sharing permanently removes all notice requirements
Excepted sharing does not permanently eliminate all notice duties.
Option D: Yes: any policy change is irrelevant until a customer complains
A customer complaint is not the trigger for reassessing compliance.
Exam Tip
Recheck both conditions when relevant disclosure practices change.
More Federal Laws Questions
Before the team acts on a production meeting, a training manager must address SCRA Interest Rate Cap. Which response is most defensible?
A team member asks about RESPA Kickbacks and Referrals in an investor-delivery review while trying to confirm the rule-based response. Which response should the loan team use?
During a disclosure desk review, the loan team encounters an RESPA Servicing Transfer issue. Which response should avoid a shortcut that would misapply the rule?
A disciplinary-risk review raises a question about TILA APR and finance-charge rules. Which action should the renewal specialist recommend?
An MLO is reviewing procedures for a case where a compliance analyst asks why covered mortgage application data is collected. What is the proper handling?
A consumer complaint response raises a question about GLBA privacy requirements. Which action should the state compliance officer recommend?
Before the team acts on a branch training session, a policy analyst must address RESPA Servicing Transfer Notice. Which response is most defensible?
A training manager is resolving RESPA Referral Fees during an internal audit sample. Which action best fits the rule?
An operations lead is resolving ECOA Prohibited Discrimination Bases during a loan-team coaching session. Which action best fits the rule?
In a file escalation meeting, a disclosure specialist sees facts tied to TILA Closing Disclosure. What should the file reflect?
People Also Study
General Mortgage Knowledge
20% of exam
Mortgage Loan Origination Activities
27% of exam
Ethics, Fraud & Consumer Protection
18% of exam
Uniform State Test Content
11% of exam