A borrower writes to the servicer saying $2,100 was applied to escrow instead of principal. The letter arrives 2 May. Assuming the letter is a valid notice of error received at the designated address, what is the ordinary acknowledgment deadline?
Correct Answer
C) Send written acknowledgment within five days, excluding Saturdays, Sundays and legal public holidays; the substantive response has a separate deadline
C. Acknowledge the valid notice within the five-day period. Receipt starts the acknowledgment period. Acknowledgment confirms receipt, not that the alleged payment error is established. Scope and exceptions: For this ordinary error, the response generally runs 30 counted days from receipt, with a conditional 15-day extension requiring timely written reasons. Early correction and written notification within five counted days can replace the ordinary process. Special error categories have different deadlines. Source: Section 1024.35(a), (d), (e)(3) and (f)(1) — https://www.consumerfinance.gov/rules-policy/regulations/1024/35/
Why This Is the Correct Answer
C. Acknowledge the valid notice within the five-day period. Receipt starts the acknowledgment period. Acknowledgment confirms receipt, not that the alleged payment error is established. Scope and exceptions: For this ordinary error, the response generally runs 30 counted days from receipt, with a conditional 15-day extension requiring timely written reasons. Early correction and written notification within five counted days can replace the ordinary process. Special error categories have different deadlines.
Why the Other Options Are Wrong
Option A: No duty attaches unless the borrower uses the servicer's own form
A valid written notice need not use the servicer's own form.
Option B: Respond in full within 5 business days, investigation included
Five days is not the ordinary full-investigation deadline.
Option D: Acknowledge within 30 business days and respond within 45 days after that
Neither the acknowledgment period nor the proposed sequential clock is correct.
Exam Tip
Count acknowledgment and response from receipt, not one after the other.
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