During a rescission-calendar review, a file reviewer checks whether all required business days were counted. Which response is compliant?
Correct Answer
B) Count the rescission period under the TILA rule
Why this is correct: The Truth in Lending Act (TILA) grants a right of rescission for certain non-purchase money loans secured by the borrower's principal dwelling. The rescission period is three business days after consummation, delivery of the notice of the right to rescind, or delivery of all material disclosures, whichever occurs last. "Count the rescission period under the TILA rule" is the compliant action, as it requires accurately calculating this period using the correct definition of "business day" (all calendar days except Sundays and federal holidays). Why the other choices are wrong: "Treat the TILA Right of Rescission review as complete because the file contains a related PMI cancellation note" is wrong because PMI cancellation under HPA is a separate requirement unrelated to rescission timing. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because the rescission period must be honored proactively; waiting is non-compliant. "Rely on oral agreement when the rule requires documented compliance" is wrong because the right must be provided in writing, and the waiting period must be observed. Exam tip: For TILA rescission, the clock starts from the *last* of three events: consummation, notice delivery, or delivery of all material disclosures. Count all days except Sundays and federal holidays.
Why This Is the Correct Answer
The correct response is "Count the rescission period under the TILA rule" because TILA rescission rights protect consumers with ownership interests in a principal dwelling.
Why the Other Options Are Wrong
Option A: Treat the TILA Right of Rescission review as complete because the file contains a related PMI cancellation note.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
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
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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