A lender grants a consumer a $215,000 mortgage secured by a one-unit home on materially less favorable terms based on a consumer report. Assume a risk-based pricing notice would otherwise be required, a credit score is available, and no adverse action occurred. Which standardized disclosure approach can satisfy the residential-mortgage credit-score exception?
Correct Answer
A) Give each covered mortgage applicant the complete credit-score exception notice required by section 1022.74(d), in the prescribed form and time
A. Use the complete residential-mortgage credit-score exception notice. The exception requires the prescribed disclosures to each consumer in the covered residential-credit category. A score alone does not supply the required explanatory statements, comparison information and other elements. Scope and exceptions: Section 1022.74(b) does provide a genuine FCRA adverse-action-notice exception when applicable. Subsection (e) concerns other credit, not one-to-four-unit residential security. The mortgage exception notice accompanies the section 609(g) disclosure and must be provided no later than consummation for closed-end credit. Source: Section 1022.74(b), (d)(1)–(3), (e)(1) — https://www.consumerfinance.gov/rules-policy/regulations/1022/74/
Why This Is the Correct Answer
A. Use the complete residential-mortgage credit-score exception notice. The exception requires the prescribed disclosures to each consumer in the covered residential-credit category. A score alone does not supply the required explanatory statements, comparison information and other elements. Scope and exceptions: Section 1022.74(b) does provide a genuine FCRA adverse-action-notice exception when applicable. Subsection (e) concerns other credit, not one-to-four-unit residential security. The mortgage exception notice accompanies the section 609(g) disclosure and must be provided no later than consummation for closed-end credit.
Why the Other Options Are Wrong
Option B: Give the notice only where the applicant asks about the pricing offered
The disclosure duty is not dependent on a request.
Option C: Label the approved loan a denial and send a generic adverse-action form instead
Inventing an adverse action does not satisfy the rule.
Option D: Give nothing, since the applicant was approved rather than turned down
Approval does not itself eliminate a risk-based pricing notice duty.
Exam Tip
Choose the correct exception by transaction type and satisfy its full notice requirements.
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