A mortgage team asks a licensing coordinator about TILA right of rescission during a disciplinary-risk review. Which answer should guide the file?
Correct Answer
B) Give each consumer with an ownership interest rescission rights
Why this is correct: TILA's right of rescission applies to certain non-purchase money loans secured by the consumer's principal dwelling. The rule grants this right to each consumer who has an ownership interest in the dwelling, ensuring all such co-owners can cancel the transaction. The original explanation correctly anchors that these rights protect consumers with ownership interests. Why the other choices are wrong: "Use an internal exception instead of the required federal disclosure or timing rule" is wrong because internal policies cannot override federal TILA requirements. "Treat the TILA Right of Rescission review as complete because the file contains a related reverse-mortgage occupancy note" is wrong because reverse mortgages are generally exempt from rescission rights, so the note does not make the review complete for other loan types. "Rely on oral agreement when the rule requires documented compliance" is wrong because rescission rights require proper written disclosures and a documented process; oral agreements do not satisfy the law. Exam tip: Remember, rescission rights are for owners in a principal dwelling, typically for refinances or home equity loans, not for purchase money mortgages or reverse mortgages.
Why This Is the Correct Answer
The correct response is "Give each consumer with an ownership interest rescission rights" because TILA rescission rights protect consumers with ownership interests in a principal dwelling.
Why the Other Options Are Wrong
Option A: Use an internal exception instead of the required federal disclosure or timing rule.
Use an internal exception instead of the required federal disclosure or timing rule. is not correct because it does not apply the rule tested by this file scenario.
Option C: Treat the TILA Right of Rescission review as complete because the file contains a related reverse-mortgage occupancy note.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
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
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