A licensing coordinator is resolving TILA Qualified Mortgage during a loan-team coaching session. Which action best fits the rule?
Correct Answer
B) Document income, debts, and simultaneous loans
Why this is correct: The TILA Ability-to-Repay/Qualified Mortgage (ATR/QM) rule requires creditors to make a reasonable, good-faith determination of a consumer's ability to repay the loan. This determination must be based on verified and documented financial information. "Document income, debts, and simultaneous loans" is a core part of this process, as the rule mandates considering and verifying the consumer's current income, assets, employment, current debt obligations, and debt-to-income ratio. Why the other choices are wrong: "Use an internal exception instead of the required federal disclosure or timing rule" is wrong because federal ATR/QM requirements are not optional; they cannot be bypassed by internal policies. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because compliance with ATR must be demonstrated at or before consummation, not retroactively upon regulatory inquiry. "Delay the TILA Qualified Mortgage step until a later licensing review instead of acting now" is wrong because the ATR determination is a prerequisite to extending credit; it cannot be deferred. Exam tip: ATR is about verifying the borrower's financial picture at the time of the loan. Documentation is mandatory—think of the eight underwriting factors the rule requires creditors to consider.
Why This Is the Correct Answer
The correct response is "Document income, debts, and simultaneous loans" because ATR/QM rules require verified repayment ability and restrict risky QM features.
Why the Other Options Are Wrong
Option A: Use an internal exception instead of the required federal disclosure or timing rule.
Use an internal exception instead of the required federal disclosure or timing rule. is not correct because it does not apply the rule tested by this file scenario.
Option C: Wait until a regulator asks for the file before applying the federal requirement.
Wait until a regulator asks for the file before applying the federal requirement. is not correct because it does not apply the rule tested by this file scenario.
Option D: Delay the TILA Qualified Mortgage step until a later licensing review instead of acting now.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Memory Technique
ATR/QM repayment-ability rules: identify the rule being tested, then choose the action that documents or applies that rule before the file moves forward.
Exam Tip
Match the file facts to ATR/QM repayment-ability rules; do not choose an exception or shortcut that skips the required rule.
Common Mistakes to Avoid
- -Choosing an internal exception instead of the governing rule
- -Treating preliminary or informal facts as a substitute for required documentation
- -Answering from a familiar but unrelated mortgage topic
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