During a borrower intake review, an operations lead encounters a Transaction Types issue. Which response should resolve the issue before the file moves forward?
Correct Answer
D) Classify the transaction type before applying the rule
Why this is correct: The original explanation notes that different transaction types (e.g., purchase, refinance) have distinct disclosure and risk rules. The governing concept is that correctly classifying the transaction type is essential before applying specific rules, ensuring proper procedures and compliance. Why the other choices are wrong: "Apply a different loan-program rule without checking the file facts" is incorrect because transaction type must be determined from file facts first. "Treat the Transaction Types review as complete because the file contains a related refinance benefit note" is wrong because a note alone does not confirm the transaction type; full classification is needed. "Use the same treatment for all mortgage products without comparing program requirements" is incorrect because transaction types require different treatments. Exam tip: Always classify the transaction type first—this dictates the applicable rules and disclosures.
Why This Is the Correct Answer
The correct response is "Classify the transaction type before applying the rule" because Purchase, refinance, cash-out, construction, and home-equity transactions have different disclosure and risk rules.
Why the Other Options Are Wrong
Option A: Apply a different loan-program rule without checking the file facts.
Apply a different loan-program rule without checking the file facts. is not correct because it does not apply the rule tested by this file scenario.
Option B: Treat the Transaction Types review as complete because the file contains a related refinance benefit note.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Option C: Use the same treatment for all mortgage products without comparing program requirements.
Use the same treatment for all mortgage products without comparing program requirements. is not correct because it does not apply the rule tested by this file scenario.
Memory Technique
Transaction Types: 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 Transaction Types; 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
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