The branch manager compares the file facts with FCRA Risk Based Pricing during a borrower follow-up call. Which conclusion is accurate?
Correct Answer
D) Provide the required credit-report notice when applicable
Why this is correct: The FCRA's Risk-Based Pricing (RBP) rules require a creditor to provide a notice to a consumer when, based on the consumer's credit report, the creditor offers credit on terms less favorable than the terms offered to a substantial proportion of other consumers. The notice alerts the consumer to the role of their credit history. Providing the required notice when the situation is applicable is the accurate and compliant action. Why the other choices are wrong: "Use an internal exception instead of the required federal disclosure or timing rule" is wrong because FCRA notice requirements are federal law and cannot be circumvented by internal policy. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because the notice must be given at the time of the credit offer or soon after, as required by rule, not upon later inquiry. "Treat the FCRA Risk Based Pricing review as complete because the file contains a related closing disclosure note" is wrong because the Closing Disclosure (under TILA-RESPA) is a different document with different purposes; its presence does not satisfy the specific FCRA RBP notice requirement. Exam tip: Risk-Based Pricing Notices and Adverse Action Notices under FCRA are distinct. Know which one is triggered by the specific credit decision.
Why This Is the Correct Answer
The correct response is "Provide the required credit-report notice when applicable" because Consumer reports require a permissible purpose and proper FCRA/Reg V handling.
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: Wait until a regulator asks for the file before applying the federal requirement.
Wait until a regulator asks for the file before applying the federal requirement. is not correct because it does not apply the rule tested by this file scenario.
Option C: Treat the FCRA Risk Based Pricing review as complete because the file contains a related closing disclosure note.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Memory Technique
FCRA credit-reporting 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 FCRA credit-reporting 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
A mortgage file is paused during a lock-desk handoff because of FCRA Adverse Action Notices. Which answer should identify which rule controls the file?
Before the team acts on a production meeting, a training manager must address SCRA Interest Rate Cap. Which response is most defensible?
Before the team acts on a production meeting, the MLO must address FCRA Adverse Action Notice. Which response is most defensible?
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During a disclosure desk review, the loan team encounters an RESPA Servicing Transfer issue. Which response should avoid a shortcut that would misapply the rule?
A mortgage team asks a quality-control reviewer about TRID Loan Estimate timing during a record-retention audit. Which answer should guide the file?
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