In a mortgage origination file, an MLO wants to pull a consumer report for curiosity before an application purpose exists. Which action should be taken?
Correct Answer
D) Use consumer reports only for a permissible credit purpose
Why this is correct: The FCRA and Regulation V (12 CFR Part 1022) mandate that consumer reports be used only for permissible purposes, like evaluating credit. Pulling a report for curiosity is not permissible. The required action is to use consumer reports only for a permissible credit purpose. Why the other choices are wrong: "Treat the compliance requirement as optional because closing is near" is wrong because timing does not excuse a violation of federal law. "Continue processing without correcting the disclosure, licensing, compensation, or consumer-protection issue" is wrong because the impermissible pull is a serious consumer protection issue that must be corrected. "Ignore the issue if the borrower orally agrees to continue" is wrong because borrower consent does not create a permissible purpose under the FCRA for pulling a report out of curiosity. Exam tip: A permissible purpose under the FCRA is defined by law, not by borrower or MLO convenience or curiosity.
Why This Is the Correct Answer
The correct response is "Use consumer reports only for a permissible credit purpose". Consumer report use must connect to a permissible purpose, such as evaluating credit eligibility.
Why the Other Options Are Wrong
Option A: Treat the compliance requirement as optional because closing is near.
Treat the compliance requirement as optional because closing is near. is not correct because the governing rule requires the compliant answer shown in the explanation.
Option B: Continue processing without correcting the disclosure, licensing, compensation, or consumer-protection issue.
Continue processing without correcting the disclosure, licensing, compensation, or consumer-protection issue. is not correct because the governing rule requires the compliant answer shown in the explanation.
Option C: Ignore the issue if the borrower orally agrees to continue.
Ignore the issue if the borrower orally agrees to continue. is not correct because the governing rule requires the compliant answer shown in the explanation.
Memory Technique
For credit report access, ask: What is the permissible purpose?
Exam Tip
For credit report access, ask: What is the permissible purpose?
Common Mistakes to Avoid
- -Access to a credit system does not create authority to pull reports casually.
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