A mortgage file is paused during a secondary-market screen because of FCRA Adverse Action Notice. Which answer should choose the compliant next step?
Correct Answer
C) Keep consumer-report information within authorized use
Why this is correct: The original explanation states that consumer reports require a permissible purpose and proper handling. The Fair Credit Reporting Act (FCRA) mandates that users of consumer report information (like credit reports) have a permissible purpose and use the information only for authorized purposes. Keeping information within authorized use is a fundamental FCRA compliance requirement. Why the other choices are wrong: "Use the appraisal review standard to decide the FCRA Adverse Action Notice issue before confirming the trigger facts" is wrong because it conflates appraisal rules with FCRA adverse action triggers, which are based on credit report information. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because FCRA duties (like providing adverse action notices) have specific timelines triggered by the action itself. "Rely on oral agreement when the rule requires documented compliance" is wrong because FCRA notices (like adverse action notices) must be in writing. Exam tip: FCRA's 'permissible purpose' is key for pulling a credit report; 'adverse action notice' is required if credit information negatively affects the application.
Why This Is the Correct Answer
The correct response is "Keep consumer-report information within authorized use" because Consumer reports require a permissible purpose and proper FCRA/Reg V handling.
Why the Other Options Are Wrong
Option A: Use the appraisal review standard to decide the FCRA Adverse Action Notice issue before confirming the trigger facts.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
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 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
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
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