A depository institution has a branch with six originators. It gives them a manual and annual training but has no procedure for monitoring compliance with the compensation, steering, qualification, and identification rules. Under Regulation Z section 1026.36(j), what is missing?
Correct Answer
B) Written procedures reasonably designed to monitor compliance, appropriate to its mortgage activities
B. Written compliance-monitoring procedures are missing. The specified rule requires policies and procedures both to ensure compliance and to monitor it. Their design must fit the institution’s mortgage activities; distributing a manual and training does not establish the missing monitoring process. Scope and exceptions: Section 1026.36(j) addresses depository institutions and compliance with paragraphs (d)–(g). Do not infer that every institution needs identical staffing, or that this provision exhausts other entities’ obligations. Source: Section 1026.36(j)(1)–(2) — https://www.consumerfinance.gov/rules-policy/regulations/1026/36/
Why This Is the Correct Answer
B. Written compliance-monitoring procedures are missing. The specified rule requires policies and procedures both to ensure compliance and to monitor it. Their design must fit the institution’s mortgage activities; distributing a manual and training does not establish the missing monitoring process. Scope and exceptions: Section 1026.36(j) addresses depository institutions and compliance with paragraphs (d)–(g). Do not infer that every institution needs identical staffing, or that this provision exhausts other entities’ obligations.
Why the Other Options Are Wrong
Option A: A second training day, which alone satisfies the monitoring requirement
Another training session alone does not supply monitoring.
Option C: A dedicated on-site compliance officer at every branch, regardless of size
The provision does not mandate one on-site officer at every branch.
Option D: Employee signatures on the manual, which replace ongoing monitoring
Employee acknowledgements do not replace monitoring.
Exam Tip
Training communicates rules; monitoring tests whether practices follow them.
More UST Questions
A Washington broker provides the federal settlement service estimates and booklet in 2026 and no separate state itemization. Can disclosures compliant with RESPA and Regulation X satisfy the state third-party itemization subsection?
Priya is comparing pre-license education providers before applying for a Florida mortgage loan originator license. How many hours of approved pre-license education must she complete in total?
An applicant is budgeting for a Florida MLO license and asks what the state application fee comes to at filing. Which figure is correct?
A newly sponsored Florida MLO is told she must buy an individual surety bond in her own name before she can originate. Is that correct?
A Washington consumer loan act licensee also brokers loans in 2026 outside the authority of that act. Does the consumer-loan-act exemption extend to mortgage brokerage outside that act’s authority?
A $200,000 Texas home equity loan has $3,700 in fees subject to the constitutional cap and a separate $600 fee for an appraisal performed by a third-party appraiser. Do the capped fees exceed the limit?
An owner applies for a Texas home equity loan on 4 May 2026 and the lender delivers the required notice on 8 May. Which date starts the constitutional 12-day waiting period for closing?
An owner closed a Texas home equity loan on 3 February 2026 and wants a second one on the same homestead in November 2026. Assuming no declared-emergency exception applies and the earlier home equity lien will be paid off, may the new loan close in November?
A Texas home equity loan forecloses and the sale leaves the lender $62,000 short of the balance owed. Absent actual fraud in obtaining the credit, may the lender recover the shortfall personally from the owner or spouse?
A Washington real estate broker helps a 2026 buyer arrange financing and takes only the usual sales commission. Does financing assistance incidental to a bona fide sale for only the customary real-estate commission fall within the exemption?
People Also Study
Federal Mortgage-Related Laws
24% of exam
General Mortgage Knowledge
20% of exam
Mortgage Loan Origination Activities
27% of exam
Ethics, Fraud & Consumer Protection
18% of exam
Related Study Resources
Previous Question
A practice question asks about civil penalties and disgorgement. Which answer best matches the official North Carolina rule?
Next Question
A Maryland broker shops a 2026 file for two weeks and then presents the finder fee agreement terms. Were the proposed finder-fee terms disclosed at the required time?