A mortgage file is paused during a risk-control review because of TILA Loan Estimate. Which answer should apply the requirement without relying on borrower preference?
Correct Answer
C) Base the answer on the covered-credit disclosure rule
Why this is correct: The question involves a TILA Loan Estimate issue during a risk-control review. Regulation Z (TILA) mandates that creditors provide accurate, timely Loan Estimates for most closed-end consumer credit transactions secured by real property. The "covered-credit disclosure rule" refers directly to these TILA/Regulation Z requirements. The correct action is to base the decision on this specific federal rule, ensuring compliance without substituting internal policy or borrower preference. 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 mandatory federal disclosure requirements. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because compliance must be proactive, not delayed until regulatory inquiry. "Delay the TILA Loan Estimate step until a later secondary-market delivery review instead of acting now" is wrong because the Loan Estimate has strict timing rules (generally within three business days of application) that cannot be postponed. Exam tip: For TILA timing and disclosure questions, remember the rule is absolute; internal procedures cannot create exceptions to federal requirements.
Why This Is the Correct Answer
The correct response is "Base the answer on the covered-credit disclosure rule" because Regulation Z requires accurate APR, finance-charge, disclosure, and mortgage-credit practices.
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 D: Delay the TILA Loan Estimate step until a later secondary-market delivery review instead of acting now.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Memory Technique
TILA APR and finance-charge 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 TILA APR and finance-charge 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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