A borrower’s brother-in-law calls the branch, says he is helping with the purchase, and asks for the bank statements in the file. He knows the loan number and the closing date. What has to happen before anything is sent?
Correct Answer
A) Follow privacy limits before sharing nonpublic personal information
Why this is correct: The privacy rule under Regulation P (12 CFR Part 1016) protects a borrower's nonpublic personal information (NPI), such as bank statements. Sharing NPI with an outside party is prohibited unless a specific exception under the rule applies. Since the request is made without a permissible basis, the compliant response is to follow the privacy limits and not share the information. Why the other choices are wrong: "Continue the activity because the borrower appears willing to proceed" is wrong because sharing NPI requires a legal permissible purpose; apparent willingness alone is insufficient. "Ignore the consumer-protection issue unless the borrower complains" is wrong because privacy compliance is a proactive duty. "Document the issue later instead of correcting the compliance problem first" is wrong because the priority is to prevent the unauthorized disclosure. Exam tip: For privacy questions, remember that sharing nonpublic personal information requires a permissible purpose under the law. If none exists, do not share.
Why This Is the Correct Answer
The correct response is "Follow privacy limits before sharing nonpublic personal information" because Lines 273-277; 12 CFR Part 1016 summary and Subparts A-B.
Why the Other Options Are Wrong
Option B: Continue the activity because the borrower appears willing to proceed.
Continue the activity because the borrower appears willing to proceed. is not correct because it does not apply the rule tested by this file scenario.
Option C: Ignore the consumer-protection issue unless the borrower complains.
Ignore the consumer-protection issue unless the borrower complains. is not correct because it does not apply the rule tested by this file scenario.
Option D: Document the issue later instead of correcting the compliance problem first.
Document the issue later instead of correcting the compliance problem first. is not correct because it does not apply the rule tested by this file scenario.
Memory Technique
borrower privacy and confidentiality: 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 borrower privacy and confidentiality; 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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