A creditor has determined that a proposed mortgage is a high-cost mortgage under HOEPA. Closing is planned in five days. What counseling documentation must the creditor receive before extending the mortgage?
Correct Answer
C) Written certification that the consumer received the required pre-loan counseling
C. Obtain written certification of the required counseling before extending the loan. The creditor must receive certification from an appropriately approved counselor. The counselor cannot be employed by or affiliated with the creditor. A scheduled closing date does not waive the requirement. Scope and exceptions: Counseling must follow the applicable disclosures. Certification documents receipt of counseling, not a counselor’s approval of the loan. State-authority approval is sufficient only if permitted by HUD. Source: Section 1026.34(a)(5)(i)–(iv) and official comments — https://www.consumerfinance.gov/rules-policy/regulations/1026/34/
Why This Is the Correct Answer
C. Obtain written certification of the required counseling before extending the loan. The creditor must receive certification from an appropriately approved counselor. The counselor cannot be employed by or affiliated with the creditor. A scheduled closing date does not waive the requirement. Scope and exceptions: Counseling must follow the applicable disclosures. Certification documents receipt of counseling, not a counselor’s approval of the loan. State-authority approval is sufficient only if permitted by HUD.
Why the Other Options Are Wrong
Option A: Counselling is required only where the borrower asks for a referral
The obligation does not depend on a borrower requesting a referral.
Option B: A 3-day cooling-off period after the disclosure is the only added step
Disclosure timing does not replace counseling certification.
Option D: No extra step: the high-cost tests affect pricing and not the process
High-cost status creates substantive process requirements.
Exam Tip
High-cost counseling is a documented prerequisite, not merely a referral.
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