A pre-closing checklist raises a TILA Loan Estimate Timing question for an audit analyst. What answer should guide the file?
Correct Answer
C) Disclose APR and finance-charge terms accurately
Why this is correct: TILA and Regulation Z require that key loan cost disclosures, specifically the APR and finance charge, be disclosed accurately on the Loan Estimate and Closing Disclosure. Accuracy is paramount; even if timing rules are met, an inaccurate APR or finance charge is a violation. Therefore, when a TILA Loan Estimate Timing question is raised, the guiding principle is to ensure these terms are disclosed accurately. Why the other choices are wrong: "Use an internal exception instead of the required federal disclosure or timing rule" is wrong because federal disclosure rules for APR and finance charge are mandatory and cannot be overridden by internal policy. "Treat the TILA Loan Estimate Timing review as complete because the file contains a related privacy notice note" is wrong because a privacy notice (GLBA) is a separate requirement and does not satisfy TILA's specific timing and content rules for cost disclosures. "Rely on oral agreement when the rule requires documented compliance" is wrong because TILA disclosures must be provided in writing. Exam tip: TILA's core is about disclosing the true cost of credit. The APR and finance charge are the most critical numbers; they must be accurate.
Why This Is the Correct Answer
The correct response is "Disclose APR and finance-charge terms accurately" because Regulation Z requires accurate APR, finance-charge, disclosure, and mortgage-credit practices.
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 B: Treat the TILA Loan Estimate Timing review as complete because the file contains a related privacy notice note.
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
TILA APR and finance-charge 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 TILA APR and finance-charge 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
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