A licensing coordinator is resolving Dodd Frank Appraisal Independence during an internal audit sample. Which action best fits the rule?
Correct Answer
D) Use the written provider-list rule for shoppable services
Why this is correct: For shoppable settlement services under TRID, the lender must provide a written list of providers to the borrower, allowing the borrower to shop for services without being forced to use an affiliate. This promotes independence and avoids referral fee violations. The original explanation anchors this by stating third-party services must follow provider-list rules. Why the other choices are wrong: "Collect a fee from the provider for sending the borrower to that service" is wrong because this constitutes an illegal referral fee under RESPA. "Tell the borrower shopping is allowed while making the affiliate provider mandatory" is wrong because making an affiliate mandatory violates the shoppable services rule if the service is on the list. "Leave provider charges undisclosed until the final Closing Disclosure" is wrong because charges for shoppable services must be disclosed on the Loan Estimate with tolerances applied. Exam tip: The written provider list is required for shoppable services—it’s a key TRID compliance step.
Why This Is the Correct Answer
The correct response is "Use the written provider-list rule for shoppable services" because Third-party settlement services must avoid referral fees and follow provider-list/tolerance rules.
Why the Other Options Are Wrong
Option A: Collect a fee from the provider for sending the borrower to that service.
This choice is not the best answer because it applies the wrong file step for third-party settlement-service controls; the governing rule is tested by the correct option.
Option B: Tell the borrower shopping is allowed while making the affiliate provider mandatory.
This choice is not the best answer because it applies the wrong file step for third-party settlement-service controls; the governing rule is tested by the correct option.
Option C: Leave provider charges undisclosed until the final Closing Disclosure.
This choice is not the best answer because it applies the wrong file step for third-party settlement-service controls; the governing rule is tested by the correct option.
Memory Technique
third-party settlement-service controls: identify the rule being tested, then choose the action that documents or applies that rule before the file moves forward.
Exam Tip
For third-party settlement-service controls 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
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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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