A customer-service escalation raises a HOEPA Points and Fees question for a licensing coordinator. What answer should guide the file?
Correct Answer
D) Provide required counseling and disclosures when HOEPA applies
Why this is correct: When a mortgage loan meets HOEPA's high-cost thresholds, specific consumer protections are triggered. These include mandatory pre-loan counseling from a HUD-approved counselor and the provision of specific written disclosures about the loan's costs and risks. Providing these required counseling sessions and disclosures is the compliant action when HOEPA applies. Why the other choices are wrong: "Use the HMDA reporting standard to decide the HOEPA Points and Fees issue before confirming the trigger facts" is wrong because HMDA (data reporting) and HOEPA (consumer protections for high-cost loans) are governed by different rules and thresholds. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because HOEPA counseling and disclosures must be provided to the borrower well before consummation. "Rely on oral agreement when the rule requires documented compliance" is wrong because HOEPA explicitly requires *written* disclosures and proof of *independent* counseling. Exam tip: For HOEPA, remember the two key borrower safeguards: independent counseling and special disclosures. The correct answer will involve providing these.
Why This Is the Correct Answer
The correct response is "Provide required counseling and disclosures when HOEPA applies" because HOEPA/high-cost mortgage rules use rate, points-and-fees, and prepayment-penalty triggers and restrict risky terms.
Why the Other Options Are Wrong
Option A: Use the HMDA reporting standard to decide the HOEPA Points and Fees issue before confirming the trigger facts.
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
HOEPA high-cost mortgage rules: 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 HOEPA high-cost mortgage rules; 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
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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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