A seller acquired legal title for $188,000. The consumer's agreement to buy the home for $268,000 is dated 140 days after that acquisition. The purchase uses a higher-priced mortgage subject to section 1026.35(c), with no general or additional-appraisal exemption. Is an additional appraisal required, and may the consumer be charged for both appraisals?
Correct Answer
B) A 2nd appraisal is required, at no cost to the borrower for that one
B. Two appraisals are required, but the consumer may be charged for only one. The $80,000 increase divided by $188,000 is about 42.55%. At 140 days, the applicable price-increase threshold is more than 20%, which is exceeded. Scope and exceptions: Measure through the acquisition agreement, not closing. Separate appraisers are required. The cost prohibition cannot be evaded by marking up the rate or other fees; the question excludes the rule's exemptions. Source: Section 1026.35(c)(4)(i)–(v) and comments — https://www.consumerfinance.gov/rules-policy/regulations/1026/35/
Why This Is the Correct Answer
B. Two appraisals are required, but the consumer may be charged for only one. The $80,000 increase divided by $188,000 is about 42.55%. At 140 days, the applicable price-increase threshold is more than 20%, which is exceeded. Scope and exceptions: Measure through the acquisition agreement, not closing. Separate appraisers are required. The cost prohibition cannot be evaded by marking up the rate or other fees; the question excludes the rule's exemptions.
Why the Other Options Are Wrong
Option A: One appraisal suffices, because the resale is more than 90 days out
The 91-to-180-day window still applies.
Option C: No appraisal rule applies, since the increase is under the 50% threshold
Fifty percent is not the applicable threshold.
Option D: A 2nd appraisal is required, and its cost may be passed to the borrower
It incorrectly transfers both appraisal costs to the consumer.
Exam Tip
Check coverage, elapsed days, price increase and cost allocation separately.
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
Related Study Resources
Previous Question
A team member asks about TILA Higher Priced Mortgage Loans in a daily pipeline review while trying to identify which rule controls the file. Which response should the file reviewer use?
Next Question
During a disclosure desk review, a licensing coordinator encounters an RESPA Servicing Rules issue. Which response should separate the real requirement from a near-miss shortcut?