A mortgage team asks a licensing coordinator about GLBA privacy requirements during a new-license application. Which answer should guide the file?
Correct Answer
C) Share borrower information only with proper authority
Why this is correct: The Gramm-Leach-Bliley Act (GLBA) requires financial institutions to protect nonpublic personal information. A key requirement is to share such information only with proper authority, which typically means having a permissible purpose under the law or obtaining consumer consent. Why the other choices are wrong: "Use an internal exception instead of the required federal disclosure or timing rule" is wrong because internal policies cannot override GLBA's privacy safeguards. "Assume the GLBA Privacy Requirements condition is met because the borrower satisfied the separate appraisal review requirement" is wrong because privacy compliance is independent of appraisal rules. "Rely on oral agreement when the rule requires documented compliance" is wrong because GLBA often requires written privacy notices and documented opt-outs. Exam tip: GLBA focuses on safeguarding customer data; sharing information requires a legitimate business need or customer authorization.
Why This Is the Correct Answer
The correct response is "Share borrower information only with proper authority" because Nonpublic personal information must be handled under GLBA privacy limits and notices.
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: Assume the GLBA Privacy Requirements condition is met because the borrower satisfied the separate appraisal review requirement.
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
GLBA privacy 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 GLBA privacy 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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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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A training manager is resolving RESPA Referral Fees during an internal audit sample. Which action best fits the rule?
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In a file escalation meeting, a disclosure specialist sees facts tied to TILA Closing Disclosure. What should the file reflect?
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