A closer collects an undated waiver statement, signed by 1 of the 2 borrowers on title, saying only "I waive my right to rescind". What does the rule require the statement to contain?
Correct Answer
B) Do not waive rescission without a valid emergency waiver
Why this is correct: TILA provides a right of rescission for certain loans (typically refinances) secured by the borrower's principal dwelling. This right allows the borrower to cancel the transaction within three business days after closing or after receiving proper disclosures, whichever is later. The right is fundamental and can only be waived by the borrower in a bona fide personal financial emergency, which requires a specific written waiver. The compliant action is not to waive this right without a valid emergency waiver. Why the other choices are wrong: "Use an internal exception instead of the required federal disclosure or timing rule" is impermissible for this core consumer protection. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because the right must be honored at the time of closing. "Rely on oral agreement when the rule requires documented compliance" is incorrect because a waiver of rescission, if allowed, must be in writing. Exam tip: Remember, the right of rescission is a powerful consumer right; a waiver is only valid for a documented personal financial emergency.
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 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 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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A team member asks about TILA Right of Rescission in a compliance desk review while trying to resolve the issue before the file moves forward. Which response should the MLO use?
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