A loan is identified as high-cost under HOEPA. The lender wants to close 5 days after the borrower received the special disclosure. What must the creditor verify about homeownership counseling before consummating this high-cost mortgage?
Correct Answer
B) Receive written certification of the required counseling from an appropriately approved counselor before closing
B. The creditor must receive the required written counseling certification before extending the high-cost mortgage. Elapsed time after disclosure is not evidence that counseling occurred. The certification requirement is separate from the applicable disclosure waiting periods. Scope and exceptions: The counselor must have HUD approval or, where HUD permits, state housing finance authority approval. Certification shows counseling occurred; it is not the counselor’s endorsement of the loan. Source: 1026.34(a)(5)(i); comments 1–5 — https://www.consumerfinance.gov/rules-policy/regulations/1026/34/
Why This Is the Correct Answer
B. The creditor must receive the required written counseling certification before extending the high-cost mortgage. Elapsed time after disclosure is not evidence that counseling occurred. The certification requirement is separate from the applicable disclosure waiting periods. Scope and exceptions: The counselor must have HUD approval or, where HUD permits, state housing finance authority approval. Certification shows counseling occurred; it is not the counselor’s endorsement of the loan.
Why the Other Options Are Wrong
Option A: Close on day 5, since the 3-day disclosure period has already passed
It treats one timing issue as a substitute for the counseling requirement.
Option C: No extra step: counseling is recommended for high-cost loans, not required
The cited requirement is mandatory, not merely recommended.
Option D: Wait 10 days, which is the waiting period HOEPA sets for a high-cost loan
Waiting ten days does not supply the missing certification.
Exam Tip
A passed waiting period and a counseling certification are different conditions.
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