Before the loan advances, a branch supervisor must resolve a HPML requirements issue in a disciplinary-risk review. What should happen?
Correct Answer
A) Check escrow and appraisal duties for a covered HPML
Why this is correct: Higher-Priced Mortgage Loans (HPMLs) are defined under TILA by comparing the loan's APR to the Average Prime Offer Rate (APOR). If covered, HPMLs trigger additional requirements, including mandatory escrow accounts for property taxes and insurance for most first-lien loans, and often require a special appraisal. The correct action is to check if the loan is a covered HPML and then ensure these specific duties (escrow and appraisal) are met. Why the other choices are wrong: "Apply the correct general concept to the wrong servicing transfer stage rather than the TILA HPML Requirements rule" is wrong because it describes misapplying a concept from loan servicing to the HPML rule, which is about origination requirements like escrow and appraisal. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because HPML requirements are mandatory at origination, not something to delay until a regulator asks. "Rely on oral agreement when the rule requires documented compliance" is wrong because HPML rules (like escrow agreements and appraisal reports) require written documentation. Exam tip: For HPMLs, remember the two key extra steps: 1) Check if APR exceeds APOR threshold, 2) If yes, apply escrow and appraisal rules.
Why This Is the Correct Answer
The correct response is "Check escrow and appraisal duties for a covered HPML" because HPML coverage depends on APR-over-APOR thresholds and carries escrow or appraisal duties.
Why the Other Options Are Wrong
Option B: Apply the correct general concept to the wrong servicing transfer stage rather than the TILA HPML Requirements rule.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
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: 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
HPML requirements: 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 HPML requirements; 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
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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 mortgage team asks a quality-control reviewer about TRID Loan Estimate timing during a record-retention audit. Which answer should guide the file?
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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?
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