During a disclosure desk review, the loan team encounters a GLBA Privacy Requirements issue. Which response should resolve the issue before the file moves forward?
Correct Answer
D) Follow privacy notice and opt-out requirements
Why this is correct: The Gramm-Leach-Bliley Act (GLBA) requires financial institutions to protect consumers' nonpublic personal information. Its Privacy Rule mandates providing a clear privacy notice explaining information-sharing practices and offering an opt-out right before sharing nonpublic personal information with nonaffiliated third parties. Following these notice and opt-out requirements directly resolves any GLBA Privacy Requirements issue during a desk review. Why the other choices are wrong: "Use an internal exception instead of the required federal disclosure or timing rule" is wrong because internal policies cannot override federal law; GLBA's requirements are mandatory. "Apply the correct general concept to the wrong document-retention stage rather than the GLBA Privacy Requirements rule" is wrong because it misapplies a compliance concept to an irrelevant procedural step, failing to address the specific privacy rule violation. "Rely on oral agreement when the rule requires documented compliance" is wrong because GLBA privacy notices and opt-out elections must be provided in writing; oral agreements do not satisfy this documented compliance requirement. Exam tip: For GLBA privacy questions, remember the core obligations: provide a privacy notice and honor the consumer's opt-out choice. These are non-negotiable federal requirements.
Why This Is the Correct Answer
The correct response is "Follow privacy notice and opt-out requirements" because Nonpublic personal information must be handled under GLBA privacy limits and notices.
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 B: Apply the correct general concept to the wrong document-retention stage rather than the GLBA Privacy Requirements rule.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Option C: Rely on oral agreement when the rule requires documented compliance.
Rely on oral agreement when the rule requires documented compliance. is not correct because it does not apply the rule tested by this file scenario.
Memory Technique
GLBA privacy requirements: 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 GLBA privacy requirements; 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
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
For a loan subject to the general ability-to-repay rule, an underwriter considers income or assets, current employment when relied on, the payment on the new loan, simultaneous-loan payments, and mortgage-related obligations. Which three considerations still must be addressed?
Next Question
A borrower applying by telephone on 6 May declines to state her ethnicity, race and sex. The originator can see none of the 3 and the file is otherwise complete. For this HMDA-covered telephone application, how should the lender record the demographic information the applicant declines to provide?