A mortgage file is paused during a policy refresh meeting because of TILA RESPA Loan Estimate Tolerances. Which answer should avoid a shortcut that would misapply the rule?
Correct Answer
C) Disclose settlement charges within TRID timing rules
Why this is correct: The file is paused for a TILA-RESPA Integrated Disclosure (TRID) Loan Estimate tolerance issue. TRID rules mandate that settlement charges be disclosed accurately within specific tolerance categories (0%, 10%, unlimited). The compliant action is to disclose these charges within TRID timing rules, which includes providing the Loan Estimate and Closing Disclosure at the required times. Why the other choices are wrong: "Cure a tolerance problem by renaming the fee instead of documenting or refunding the variance" is wrong because fee reclassification to avoid tolerance cures is a deceptive practice and violates TRID. "Move the fee to a different category to avoid a tolerance cure" is wrong for the same reason; it circumvents the tolerance rules. "Increase a zero-tolerance charge because the borrower accepted the cost verbally" is wrong because zero-tolerance charges generally cannot increase at all, regardless of borrower acceptance. Exam tip: TRID tolerances are strict; curing a variance requires a refund or proper documentation, not fee manipulation.
Why This Is the Correct Answer
The correct response is "Disclose settlement charges within TRID timing rules" because TRID fee disclosures and tolerance categories govern estimates, revisions, and closing-cost comparison.
Why the Other Options Are Wrong
Option A: Cure a tolerance problem by renaming the fee instead of documenting or refunding the variance.
This choice is a tempting shortcut, but it conflicts with fee disclosure and tolerance treatment because the file still needs the required documentation, timing, or rule-based review before the action is taken.
Option B: Move the fee to a different category to avoid a tolerance cure.
This choice is not the best answer because it applies the wrong file step for fee disclosure and tolerance treatment; the governing rule is tested by the correct option.
Option D: Increase a zero-tolerance charge because the borrower accepted the cost verbally.
This choice is a tempting shortcut, but it conflicts with fee disclosure and tolerance treatment because the file still needs the required documentation, timing, or rule-based review before the action is taken.
Memory Technique
TILA RESPA Loan Estimate Tolerances: identify the rule being tested, then choose the action that documents or applies that rule before the file moves forward.
Exam Tip
For fee disclosure and tolerance treatment questions, separate the required file step from plausible sales, timing, or documentation shortcuts.
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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