On 12 August a lender decides to share borrower information with an unaffiliated marketing company. Its privacy notice describes the sharing and offers an opt-out. Assuming this sharing is subject to GLBA's opt-out requirement and no exception applies, what opportunity must the lender provide before sharing?
Correct Answer
B) Provide a reasonable opportunity to opt out before disclosing the information
B. A reasonable opt-out opportunity must precede disclosure. The initial notice and opt-out notice are separate prerequisites from the opportunity to act. With no exception, disclosure also requires that the consumer has not opted out. Notice alone does not authorize immediate sharing. Scope and exceptions: The regulation supplies different reasonable-opportunity examples, including specified 30-day mail and electronic scenarios and an isolated-transaction example. Do not invent one universal deadline from the lender’s August 12 decision. Other restrictions and exceptions require separate analysis. Source: Section 1016.10(a)(1)–(3) — https://www.consumerfinance.gov/rules-policy/regulations/1016/10/
Why This Is the Correct Answer
B. A reasonable opt-out opportunity must precede disclosure. The initial notice and opt-out notice are separate prerequisites from the opportunity to act. With no exception, disclosure also requires that the consumer has not opted out. Notice alone does not authorize immediate sharing. Scope and exceptions: The regulation supplies different reasonable-opportunity examples, including specified 30-day mail and electronic scenarios and an isolated-transaction example. Do not invent one universal deadline from the lender’s August 12 decision. Other restrictions and exceptions require separate analysis.
Why the Other Options Are Wrong
Option A: It may share at once, since the notice describes what will happen
It omits the opportunity to act before disclosure.
Option C: It may share where the borrower does not object within 3 business days
Three business days is not the rule’s general safe waiting period.
Option D: It may never share with an unaffiliated party whatever the notice says
The rule conditionally permits sharing; it is not an absolute ban.
Exam Tip
Notice, opportunity and no opt-out are distinct conditions—not interchangeable steps.
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 borrower at the 80% point has two thirty-day late payments in the last twelve months and writes asking for cancellation. What does the servicer have to consider beyond the balance?
Next Question
An MLA-covered borrower considers a home-purchase loan secured by that dwelling and a $3,000 unsecured loan for household expenses carrying a finance charge. The unsecured loan is subject to Regulation Z and no MLA exclusion applies to it. Which loan is covered consumer credit under the Military Lending Act?