A risk reviewer is resolving Settlement Procedures during an internal audit sample. Which action best fits the rule?
Correct Answer
B) Confirm the required closing disclosure timing
Why this is correct: The Real Estate Settlement Procedures Act (RESPA) and TILA-RESPA Integrated Disclosure (TRID) rule mandate strict timing for the Closing Disclosure. It must be provided to the consumer at least three business days before consummation (closing). A proper audit of Settlement Procedures must verify this critical timing requirement was met. Why the other choices are wrong: "Apply a different loan-program rule without checking the file facts" is wrong because settlement timing is a specific, non-negotiable rule; applying another rule is non-compliant. "Ignore product, occupancy, LTV, or eligibility limits because the borrower prefers the loan" is wrong because these are underwriting requirements separate from disclosure timing, and they cannot be waived by borrower preference. "Treat the Settlement Procedures review as complete because the file contains a related branch licensing note" is wrong because a note on an unrelated topic (licensing) does not prove compliance with the specific closing disclosure timing rule. Exam tip: For Settlement Procedures, the three-day rule for the Closing Disclosure is a high-frequency exam topic. Always confirm the timing.
Why This Is the Correct Answer
The correct response is "Confirm the required closing disclosure timing" because Closing requires correct disclosures, title documents, signatures, and settlement charges before consummation.
Why the Other Options Are Wrong
Option A: Apply a different loan-program rule without checking the file facts.
Apply a different loan-program rule without checking the file facts. is not correct because it does not apply the rule tested by this file scenario.
Option C: Ignore product, occupancy, LTV, or eligibility limits because the borrower prefers the loan.
Ignore product, occupancy, LTV, or eligibility limits because the borrower prefers the loan. is not correct because it does not apply the rule tested by this file scenario.
Option D: Treat the Settlement Procedures review as complete because the file contains a related branch licensing note.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Memory Technique
Settlement Procedures: 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 Settlement Procedures; 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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