In a pricing desk question, a training manager sees facts tied to TILA Right of Rescission. What should the file reflect?
Correct Answer
D) Do not waive rescission without a valid emergency waiver
Why this is correct: The Truth in Lending Act (TILA) grants borrowers a right of rescission (typically three business days) for certain refinance and home-equity loans secured by the borrower's principal dwelling. This right is a core consumer protection and generally cannot be waived, except in a bona fide personal financial emergency, which requires a specific written waiver from the borrower. Therefore, "Do not waive rescission without a valid emergency waiver" is the correct action. Why the other choices are wrong: "Use prior refinance benefit approval as a substitute for the current TILA Right of Rescission requirement" is wrong because a prior approval does not waive the rescission right for a new transaction. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because the rescission period and related disclosures are mandatory and time-sensitive. "Rely on oral agreement when the rule requires documented compliance" is wrong because TILA rescission rights and any emergency waiver must be documented in writing. Exam tip: TILA rescission rights are powerful and can only be waived in a genuine emergency with proper written documentation.
Why This Is the Correct Answer
The correct response is "Do not waive rescission without a valid emergency waiver" because TILA rescission rights protect consumers with ownership interests in a principal dwelling.
Why the Other Options Are Wrong
Option A: Use prior refinance benefit approval as a substitute for the current TILA Right of Rescission requirement.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Option B: 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 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
TILA right of rescission: 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 TILA right of rescission; 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
A mortgage file is paused during a lock-desk handoff because of FCRA Adverse Action Notices. Which answer should identify which rule controls the file?
Before the team acts on a production meeting, a training manager must address SCRA Interest Rate Cap. Which response is most defensible?
Before the team acts on a production meeting, the MLO must address FCRA Adverse Action Notice. 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 mortgage team asks a quality-control reviewer about TRID Loan Estimate timing during a record-retention audit. Which answer should guide the file?
A mortgage team asks a branch supervisor about TILA APR and finance-charge rules during a renewal checklist. Which answer should guide the file?
A mortgage file is paused during a risk-control review because of TILA QM DTI Calculation. Which answer should choose the most defensible file action?
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?
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