A mortgage operations checklist raises a question about TILA right of rescission. Which action should the branch supervisor recommend?
Correct Answer
A) Give each consumer with an ownership interest rescission rights
Why this is correct: The Truth in Lending Act (TILA) provides a right of rescission (cancellation) for certain loans secured by the consumer's principal dwelling. A fundamental rule is that this right must be given to each consumer who has an ownership interest in the property being used as security. The correct action, "Give each consumer with an ownership interest rescission rights," directly applies this rule. Why the other choices are wrong: "Use an internal exception instead of the required federal disclosure or timing rule" is wrong because TILA rescission rights are a federal consumer protection that cannot be waived by internal policy. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because the right must be given at closing, as required by law. "Treat the TILA Right of Rescission review as complete because the file contains a related SAFE Act testing note" is wrong because SAFE Act licensing requirements are separate from TILA disclosure and rescission rules; one does not substitute for the other. Exam tip: For TILA rescission, remember it applies to principal dwelling security interests, and the right must be given to all owners. Never substitute a different compliance item for this specific right.
Why This Is the Correct Answer
The correct response is "Give each consumer with an ownership interest rescission rights" because TILA rescission rights protect consumers with ownership interests in a principal dwelling.
Why the Other Options Are Wrong
Option B: 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: Treat the TILA Right of Rescission review as complete because the file contains a related SAFE Act testing note.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Memory Technique
TILA right of rescission: 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 TILA right of rescission; 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
Before the team acts on a servicing handoff check, a licensing coordinator must address TILA Advertising Requirements. Which response is most defensible?
Next Question
An FDIC-supervised institution has a designated loan requiring flood insurance. Its outstanding principal is $420,000, the house has $310,000 of insurable building value, and $250,000 is the applicable maximum NFIP building coverage available in this scenario. What is the required minimum amount under the federal rule?