A borrower says he would like to skip the 3-day wait because he leaves on holiday Friday and would rather sign everything now. The originator asks whether that is a basis for waiving rescission.
Correct Answer
A) Do not waive rescission without a valid emergency waiver
Why this is correct: The Truth in Lending Act (TILA) grants borrowers a right to rescind (cancel) certain mortgage transactions, primarily refinances and home equity loans on a principal dwelling. This right is fundamental and can only be waived by the borrower under very narrow, documented emergency circumstances. The correct action is to "Do not waive rescission without a valid emergency waiver," preserving this critical consumer protection. Why the other choices are wrong: Using prior underwriting approval is irrelevant to the rescission right, which is a separate post-closing right. Waiting for a regulator to ask is non-compliant, as the right and its procedures are mandatory. Relying on an oral agreement is invalid because TILA rescission rules require clear, written documentation for any waiver. Exam tip: TILA rescission is a powerful right for principal-dwelling loans; assume it cannot be waived unless a specific, bona fide emergency exception is met and documented.
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 B: Use prior credit underwriting approval as a substitute for the current TILA Right of Rescission requirement.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Option C: 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
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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