A borrower needs funds urgently for emergency medical treatment and writes, dates and signs a statement describing the situation and waiving rescission. His wife, who is also on title, signs nothing. Is the waiver good?
Correct Answer
B) Do not waive rescission without a valid emergency waiver
Why this is correct: TILA grants a right of rescission for certain loans secured by the borrower's principal dwelling. This right allows the borrower to cancel the transaction within a specified period after receiving required disclosures. The right is a core consumer protection and cannot be waived except in a bona fide personal financial emergency, which requires a dated written statement from the borrower describing the emergency. "Do not waive rescission without a valid emergency waiver" accurately reflects this rule. 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 TILA's federal requirements. "Assume the TILA Right of Rescission condition is met because the borrower satisfied the separate servicing transfer requirement" is wrong because servicing transfer rules are unrelated to rescission eligibility. "Rely on oral agreement when the rule requires documented compliance" is wrong because TILA rescission waivers require a written, dated statement from the borrower. Exam tip: Rescission rights are strict; only a written emergency waiver from the borrower can override them.
Why This Is the Correct Answer
The correct response is "Do not waive rescission without a valid emergency waiver" because TILA rescission rights protect consumers with ownership interests in a principal dwelling.
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 C: Assume the TILA Right of Rescission condition is met because the borrower satisfied the separate servicing transfer 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
TILA right of rescission: 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 right of rescission; 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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