A servicer will transfer a loan effective 1 October. It plans to mail the transfer notice on 24 September, 7 days out. Assuming no special transfer exception applies, does mailing the transferor's notice seven days before the transfer meet Regulation X's timing rule?
Correct Answer
B) Too late: the transferor notice is due 15 days before the effective date
B. Seven days before transfer is too late under the ordinary transferor rule. For an October 1 effective date, the ordinary 15-day advance deadline is September 16. September 24 provides only seven days, not the required advance interval. Scope and exceptions: The transferee ordinarily has 15 days after transfer; a combined notice ordinarily uses the 15-day advance deadline. Specified extraordinary transfers and notices given at settlement have different treatment, excluded here. Do not import the Loan Estimate business-day definition into this calendar interval. Source: Section 1024.33(b)(3)(i)–(iii) — https://www.consumerfinance.gov/rules-policy/regulations/1024/33/
Why This Is the Correct Answer
B. Seven days before transfer is too late under the ordinary transferor rule. For an October 1 effective date, the ordinary 15-day advance deadline is September 16. September 24 provides only seven days, not the required advance interval. Scope and exceptions: The transferee ordinarily has 15 days after transfer; a combined notice ordinarily uses the 15-day advance deadline. Specified extraordinary transfers and notices given at settlement have different treatment, excluded here. Do not import the Loan Estimate business-day definition into this calendar interval.
Why the Other Options Are Wrong
Option A: Acceptable, provided the new servicer also writes within the 7 days
The receiving servicer cannot cure the outgoing servicer's missed deadline merely by sending its own notice.
Option C: Acceptable: 7 days is the period Regulation X sets for the notice
Seven days is not this rule's interval.
Option D: Too late, because the notice is due 45 days before the effective date of transfer
Forty-five days is not the ordinary advance deadline.
Exam Tip
Identify which servicer sends the notice and which side of the effective date its deadline falls on.
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 file review raises a question about TILA advertising. Which action should the audit analyst recommend?
Next Question
An employee acts as a mortgage loan originator for a national bank on nine residential mortgage loans in a 12-month period. Which SAFE registration or licensing route applies to that bank employment?