A servicer receives a valid notice that it misapplied a $1,740 mortgage payment. It sends an acknowledgment on the fifth counted business day, but its substantive response arrives on the 35th counted business day after receipt. No extension notice or exception applies. Saturdays, Sundays and legal public holidays are excluded. Was the response timely?
Correct Answer
D) Late: the substantive response was due within 30 business days after receipt
D. The substantive response on counted day 35 is late. The acknowledgment on counted day five satisfies the acknowledgment deadline. The separate ordinary response clock runs from receipt and expires on counted day 30; day 35 is five counted days late. Scope and exceptions: A permitted 15-counted-day extension requires written notice with reasons before the initial period ends. None exists here. Certain payoff and foreclosure errors have different deadlines, and qualifying early correction has alternative compliance rules. Exclude Saturdays, Sundays and legal public holidays as the question specifies. Source: Section 1024.35(d), (e)(3), (f) — https://www.consumerfinance.gov/rules-policy/regulations/1024/35/
Why This Is the Correct Answer
D. The substantive response on counted day 35 is late. The acknowledgment on counted day five satisfies the acknowledgment deadline. The separate ordinary response clock runs from receipt and expires on counted day 30; day 35 is five counted days late. Scope and exceptions: A permitted 15-counted-day extension requires written notice with reasons before the initial period ends. None exists here. Certain payoff and foreclosure errors have different deadlines, and qualifying early correction has alternative compliance rules. Exclude Saturdays, Sundays and legal public holidays as the question specifies.
Why the Other Options Are Wrong
Option A: Late: the acknowledgment itself was due within 2 business days
The acknowledgment deadline is five counted days, not two.
Option B: On time: acknowledgment restarted the substantive-response clock
Acknowledgment does not restart the substantive clock.
Option C: On time: a servicer has 90 calendar days to investigate any error
There is no universal 90-calendar-day investigation allowance.
Exam Tip
Track acknowledgment and investigation deadlines separately from the same receipt date.
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