A bank renews an existing commercial loan secured by a warehouse. Why must the bank review the flood determination at renewal?
Correct Answer
B) Making, increasing, extending, or renewing a loan can trigger the flood requirements
Why this is correct: The regulatory trigger for reviewing flood requirements is "making, increasing, extending, or renewing" a loan. Renewing a loan is explicitly listed as one of these triggering events, requiring a new flood determination to see if the property is in an SFHA. Why the other choices are wrong: The statement "Renewal is never a flood-rule triggering event" is wrong because renewal is specifically named as a trigger. The statement "A determination is required only after default" is wrong because the determination must happen before or at the triggering event, not after default. The statement "Only residential loans require location review" is wrong because commercial loans secured by improved real estate are also subject to the rules. Exam tip: Remember the phrase "making, increasing, extending, or renewing"—these are the key actions that trigger flood review.
Why This Is the Correct Answer
Why this is correct: The regulatory trigger for reviewing flood requirements is "making, increasing, extending, or renewing" a loan. Renewing a loan is explicitly listed as one of these triggering events, requiring a new flood determination to see if the property is in an SFHA. Why the other choices are wrong: The statement "Renewal is never a flood-rule triggering event" is wrong because renewal is specifically named as a trigger. The statement "A determination is required only after default" is wrong because the determination must happen before or at the triggering event, not after default. The statement "Only residential loans require location review" is wrong because commercial loans secured by improved real estate are also subject to the rules. Exam tip: Remember the phrase "making, increasing, extending, or renewing"—these are the key actions that trigger flood review.
More Federal Laws Questions
Before the team acts on a production meeting, a training manager must address SCRA Interest Rate Cap. Which response is most defensible?
A team member asks about RESPA Kickbacks and Referrals in an investor-delivery review while trying to confirm the rule-based response. Which response should the loan team use?
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 disciplinary-risk review raises a question about TILA APR and finance-charge rules. Which action should the renewal specialist recommend?
An MLO is reviewing procedures for a case where a compliance analyst asks why covered mortgage application data is collected. What is the proper handling?
A completed application arrives on 4 May. The lender declines it on 20 May and posts the notice on 8 June.
A lender mails the loan estimate on Monday 8 June rather than delivering it in person. Consummation is set for Friday 19 June.
A consumer complaint response raises a question about GLBA privacy requirements. Which action should the state compliance officer recommend?
Before the team acts on a branch training session, a policy analyst must address RESPA Servicing Transfer Notice. Which response is most defensible?
A training manager is resolving RESPA Referral Fees during an internal audit sample. Which action best fits the rule?
People Also Study
General Mortgage Knowledge
20% of exam
Mortgage Loan Origination Activities
27% of exam
Ethics, Fraud & Consumer Protection
18% of exam
Uniform State Test Content
11% of exam
Related Study Resources
Previous Question
During a post-application update, a quality-control reviewer encounters an RESPA Section 8 Kickbacks issue. Which response should confirm the rule-based response?
Next Question
A record-retention audit raises a question about HOEPA high-cost mortgage rules. Which action should the sponsorship reviewer recommend?