Before the team acts on a branch training session, an audit analyst must address Dodd Frank Anti Steering. Which response is most defensible?
Correct Answer
D) Present loan options without steering for compensation
Why this is correct: The governing concept from Dodd-Frank is that a loan originator must not steer a consumer to a loan that provides the originator with greater compensation, unless that loan is in the consumer's interest. The original explanation states anti-steering rules restrict steering for compensation. The defensible practice is to present multiple loan options that meet the consumer's needs without the originator's compensation being the deciding factor. Why the other choices are wrong: "Treat a rushed product choice as a waiver of anti-steering safeguards" is wrong because a consumer cannot waive these protections; anti-steering is a legal requirement, not a contractual term. "Limit the discussion to the product that is easiest for the branch to close" is wrong because it fails to present options and may steer the borrower away from a more suitable product. "Present only the option that pays higher originator compensation" is a direct and blatant violation of anti-steering rules, as it prioritizes the originator's gain over the borrower's interest. Exam tip: Steering is prohibited. You must present options based on the borrower's qualifications and needs, not your paycheck.
Why This Is the Correct Answer
The correct response is "Present loan options without steering for compensation" because Anti-steering rules restrict steering consumers to loans that increase compensation without being in the consumer interest.
Why the Other Options Are Wrong
Option A: Treat a rushed product choice as a waiver of anti-steering safeguards.
This choice is not the best answer because it applies the wrong file step for anti-steering safeguards; the governing rule is tested by the correct option.
Option B: Limit the discussion to the product that is easiest for the branch to close.
This choice is not the best answer because it applies the wrong file step for anti-steering safeguards; the governing rule is tested by the correct option.
Option C: Present only the option that pays higher originator compensation.
This choice is a tempting shortcut, but it conflicts with anti-steering safeguards because the file still needs the required documentation, timing, or rule-based review before the action is taken.
Memory Technique
anti-steering rules: identify the rule being tested, then choose the action that documents or applies that rule before the file moves forward.
Exam Tip
For anti-steering safeguards questions, separate the required file step from plausible sales, timing, or documentation shortcuts.
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 Origination Questions
Before the team acts on a servicing handoff check, a closing coordinator must address Asset Verification and Reserves. Which response is most defensible?
An MLO is reviewing procedures for a case where a cost changes after the Closing Disclosure has already been provided. What is the proper handling?
During a post-application update, a quality-control reviewer encounters a Credit Analysis and Evaluation issue. Which response should avoid a shortcut that would misapply the rule?
A construction-to-permanent loan will disburse in 5 draws over 11 months before the permanent phase begins. Which Regulation Z appendix provides a disclosure method for multiple-advance construction transactions?
Before closing, the team discovers that a borrower asks which upfront charge can be collected before intent to proceed. What is the safest compliant answer?
A construction loan agreement allows advances only after documented completion of specified work. A builder requests the next draw, but no completion evidence has been provided. What should occur?
Before releasing the final construction draw, which combination most directly supports project completion and clear collateral?
A construction-to-permanent loan will convert to a substantially higher fully amortizing payment. Which payment is especially important when assessing the borrower's long-term repayment capacity?
A construction-to-permanent note states that conversion requires completion, a certificate of occupancy, and no unresolved liens. Construction is finished, but a mechanic's lien remains. What should happen?
A branch manager asks about a loan file because a processor wants to omit known monthly obligations from underwriting. What should happen?
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