A lender establishes a customer relationship with a borrower at consummation on 4 June and plans to send its privacy notice with the first statement in July. Assuming no exception permits later delivery, does sending the initial privacy notice with the July statement meet the GLBA timing requirement?
Correct Answer
B) Too late: it was due on 4 June, when the relationship was established
B. The stated relationship date makes June 4 the latest ordinary delivery date. The initial customer notice is tied to establishment of the relationship, not the first bill. The question expressly excludes a permitted later-delivery exception. Scope and exceptions: Do not generalize that every mortgage-related relationship begins only at consummation. Rules differ by institution and relationship; some disclosures to nonaffiliated parties can also require earlier notice. This question supplies the relationship date. Source: Section 1016.4(a), (c), (e) — https://www.consumerfinance.gov/rules-policy/regulations/1016/4/
Why This Is the Correct Answer
B. The stated relationship date makes June 4 the latest ordinary delivery date. The initial customer notice is tied to establishment of the relationship, not the first bill. The question expressly excludes a permitted later-delivery exception. Scope and exceptions: Do not generalize that every mortgage-related relationship begins only at consummation. Rules differ by institution and relationship; some disclosures to nonaffiliated parties can also require earlier notice. This question supplies the relationship date.
Why the Other Options Are Wrong
Option A: On time, provided the notice reaches the borrower within 30 days
There is no general 30-day grace period for this initial notice.
Option C: Too late: the initial notice was due at application rather than closing
Application is not the required date under these stated facts.
Option D: On time: the initial notice may accompany the 1st billing statement
A billing schedule does not override the initial-notice deadline.
Exam Tip
Identify when the particular customer relationship begins rather than using the first statement date.
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