In a closing-readiness check, a quality-control reviewer sees facts tied to TILA QM Safe Harbor. What should the file reflect?
Correct Answer
B) Verify ability to repay using reliable third-party records
Why this is correct: The TILA Ability-to-Repay/Qualified Mortgage (ATR/QM) rule is the governing concept. For a loan to have QM Safe Harbor status, the creditor must make a reasonable, good-faith determination of the consumer's ability to repay the loan at consummation. This determination must be based on verified and documented information. "Verify ability to repay using reliable third-party records" directly aligns with this core requirement, as third-party records (like W-2s, tax returns, or bank statements) are the standard for reliable verification. Why the other choices are wrong: "Use an internal exception instead of the required federal disclosure or timing rule" is wrong because TILA/ATR rules are federal mandates; creditors cannot substitute internal policies for these legal requirements. "Use the HMDA reporting standard to decide the TILA QM Safe Harbor issue before confirming the trigger facts" is wrong because HMDA (Home Mortgage Disclosure Act) is about data collection for fair lending, not for determining ATR or QM status. "Rely on oral agreement when the rule requires documented compliance" is wrong because the ATR rule explicitly requires documentation; oral statements are insufficient. Exam tip: For ATR/QM questions, remember the core pillars: verify income/debts, use reliable third-party records, and avoid risky loan features. Safe harbor depends on documented compliance.
Why This Is the Correct Answer
The correct response is "Verify ability to repay using reliable third-party records" because ATR/QM rules require verified repayment ability and restrict risky QM features.
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: Use the HMDA reporting standard to decide the TILA QM Safe Harbor 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 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
ATR/QM repayment-ability 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 ATR/QM repayment-ability 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
Before the team acts on a production meeting, a training manager must address SCRA Interest Rate Cap. 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 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?
A consumer complaint response raises a question about GLBA privacy requirements. Which action should the state compliance officer recommend?
Before the team acts on a branch training session, a policy analyst must address RESPA Servicing Transfer Notice. Which response is most defensible?
A training manager is resolving RESPA Referral Fees during an internal audit sample. Which action best fits the rule?
An operations lead is resolving ECOA Prohibited Discrimination Bases during a loan-team coaching session. Which action best fits the rule?
In a file escalation meeting, a disclosure specialist sees facts tied to TILA Closing Disclosure. What should the file reflect?
People Also Study
General Mortgage Knowledge
20% of exam
Mortgage Loan Origination Activities
27% of exam
Ethics, Fraud & Consumer Protection
18% of exam
Uniform State Test Content
11% of exam
Related Study Resources
Previous Question
A customer-service escalation raises a BSA AML Red Flag Detection question for a training manager. What answer should guide the file?
Next Question
A mortgage file is paused during a policy refresh meeting because of TILA Qualified Mortgage. Which answer should explain the required action to the team?