During a post-application update, the supervisor encounters a TILA Loan Estimate Timing issue. Which response should apply the requirement without relying on borrower preference?
Correct Answer
C) Place the fee in the correct tolerance category
Why this is correct: Under TRID (TILA-RESPA Integrated Disclosure) rules, fees must be placed in the correct tolerance category (0%, 10%, or unlimited) on the Loan Estimate. This categorization determines if and how fees can increase at closing and is a mandatory, objective requirement that does not depend on borrower preference. Why the other choices are wrong: "Move the fee to a different category to avoid a tolerance cure" is wrong because mis-categorizing a fee to avoid a tolerance violation is itself a disclosure violation and does not cure the original error. "Apply the correct general concept to the wrong appraisal review stage rather than the TILA Loan Estimate Timing rule" is wrong because it applies a correct principle to the wrong procedural step, failing to address the specific timing requirement for the Loan Estimate. "Wait until closing to disclose a known lender-required fee" is wrong because known fees must be disclosed in good faith on the initial Loan Estimate; delaying disclosure violates timing rules and can cause tolerance violations. Exam tip: For TILA/TRID timing issues, focus on the mandatory, objective steps: place fees in the correct category on the initial Loan Estimate based on the rule, not on what is easiest or what the borrower might want.
Why This Is the Correct Answer
The correct response is "Place the fee in the correct tolerance category" because TRID fee disclosures and tolerance categories govern estimates, revisions, and closing-cost comparison.
Why the Other Options Are Wrong
Option A: Move the fee to a different category to avoid a tolerance cure.
This choice is not the best answer because it applies the wrong file step for fee disclosure and tolerance treatment; the governing rule is tested by the correct option.
Option B: Apply the correct general concept to the wrong appraisal review stage rather than the TILA Loan Estimate Timing rule.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Option D: Wait until closing to disclose a known lender-required fee.
This choice is not the best answer because it applies the wrong file step for fee disclosure and tolerance treatment; the governing rule is tested by the correct option.
Memory Technique
TILA Loan Estimate Timing: identify the rule being tested, then choose the action that documents or applies that rule before the file moves forward.
Exam Tip
For fee disclosure and tolerance treatment questions, separate the required file step from plausible sales, timing, or documentation shortcuts.
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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Before the team acts on a servicing handoff check, a closing coordinator must address Asset Verification and Reserves. Which response is most defensible?
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