A closing coordinator compares the file facts with TILA Qualified Mortgage during a borrower follow-up call. Which conclusion is accurate?
Correct Answer
B) Consider the required ATR underwriting factors
Why this is correct: The TILA Ability-to-Repay (ATR) and Qualified Mortgage (QM) rules require lenders to make a reasonable, good-faith determination of a consumer's ability to repay the loan. This involves considering and verifying specific underwriting factors like income, assets, employment, credit history, debt-to-income ratio, and the loan's terms. The accurate conclusion is to "Consider the required ATR underwriting factors." Why the other choices are wrong: Using an internal exception instead of following the ATR/QM rules is not permitted, as these are mandatory federal requirements. Waiting for a regulator to ask is non-compliant, as the ATR determination must be made before consummation. Relying on an oral agreement is invalid, as the ATR rule requires verification and documentation of the underwriting factors. Exam tip: ATR is about verifying repayment ability. The correct answer will involve actions like considering, verifying, or documenting the borrower's financial situation, not bypassing the process.
Why This Is the Correct Answer
The correct response is "Consider the required ATR underwriting factors" 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: 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
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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