Before the loan advances, a sponsorship reviewer must resolve a RESPA servicing and affiliated-business rules issue in a record-retention audit. What should happen?
Correct Answer
B) Follow the servicing notice or response timeline
Why this is correct: RESPA and its implementing Regulation X include specific rules for servicing transfers and affiliated business arrangements (AfBAs). A key requirement is that servicers must follow strict timelines for providing servicing transfer notices and for responding to borrower inquiries and error notices. The compliant action in a record-retention audit is to verify that the file shows adherence to these required "servicing notice or response" timelines. Why the other choices are wrong: "Use an internal exception instead of the required federal disclosure or timing rule" is non-compliant; federal timing rules are not optional. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because RESPA requirements must be met proactively. "Use prior privacy notice approval as a substitute for the current RESPA AfBA Disclosure requirement" is incorrect because a privacy notice (under GLBA) is a separate requirement and does not satisfy RESPA's specific AfBA disclosure rules. Exam tip: For RESPA servicing or AfBA issues, the required action is almost always tied to a specific notice or response timeline under Regulation X.
Why This Is the Correct Answer
The correct response is "Follow the servicing notice or response timeline" because RESPA/Regulation X limits referral value and sets servicing disclosure and response duties.
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: 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: Use prior privacy notice approval as a substitute for the current RESPA AfBA Disclosure requirement.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Memory Technique
RESPA servicing and affiliated-business 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 RESPA servicing and affiliated-business 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
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