A quality-control reviewer flags a case because an MLO wants to pull a consumer report for curiosity before an application purpose exists. What correction is appropriate?
Correct Answer
B) Use consumer reports only for a permissible credit purpose
Why this is correct: The FCRA and Regulation V (12 CFR Part 1022) prohibit accessing a consumer report without a permissible purpose, such as for a credit transaction. The flagged action—pulling a report out of curiosity—violates this. The appropriate correction is to adhere to the rule: use consumer reports only for a permissible credit purpose. Why the other choices are wrong: "Use borrower consent as a substitute for the governing mortgage rule" is wrong because consent does not override the FCRA's permissible purpose requirement. "Wait until after the staff training note to decide whether the disclosure, filing, or license issue matters" is wrong because the violation is clear and requires immediate correction, not delay. "Treat licensing and NMLS authority as satisfied by an oral manager approval" is wrong because this is an FCRA issue, not a licensing issue, and oral approval is insufficient. Exam tip: In quality control, an impermissible pull of a consumer report is a critical error that must be corrected by reinforcing the "permissible purpose" rule.
Why This Is the Correct Answer
The correct response is "Use consumer reports only for a permissible credit purpose". Consumer report use must connect to a permissible purpose, such as evaluating credit eligibility.
Why the Other Options Are Wrong
Option A: Use borrower consent as a substitute for the governing mortgage rule.
Use borrower consent as a substitute for the governing mortgage rule. is not correct because it bypasses the rule supported by the explanation.
Option C: Wait until after the staff training note to decide whether the disclosure, filing, or license issue matters.
Wait until after the staff training note to decide whether the disclosure, filing, or license issue matters. is not correct because it bypasses the rule supported by the explanation.
Option D: Treat licensing and NMLS authority as satisfied by an oral manager approval.
Treat licensing and NMLS authority as satisfied by an oral manager approval. is not correct because it bypasses the rule supported by the explanation.
Memory Technique
For credit report access, ask: What is the permissible purpose?
Exam Tip
For credit report access, ask: What is the permissible purpose?
Common Mistakes to Avoid
- -Access to a credit system does not create authority to pull reports casually.
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