In a closing-readiness check, the supervisor sees facts tied to RESPA Escrow Management. What should the file reflect?
Correct Answer
C) Check HPML escrow requirements when applicable
Why this is correct: For higher-priced mortgage loans (HPMLs), specific escrow requirements under Regulation Z (12 CFR 1026.35) often apply. A closing-readiness check must verify if the loan is an HPML and, if so, ensure compliance with the applicable escrow rules, which typically mandate establishing an escrow account for property taxes and insurance for a minimum period. Why the other choices are wrong: "Resolve the RESPA Escrow Management issue with the escrow analysis exception that does not fit the facts" is wrong because applying an incorrect exception is non-compliant. "Use borrower preference instead of escrow-analysis requirements" is wrong because legal requirements override borrower preference. "Wait for a regulator request before correcting the escrow treatment" is wrong because escrow issues must be resolved before closing, not in response to a regulator. Exam tip: For escrow questions, first determine if the loan is an HPML, as this often triggers specific escrow duties.
Why This Is the Correct Answer
The correct response is "Check HPML escrow requirements when applicable" because Escrow rules address taxes, insurance, cushion limits, statements, and HPML escrow duties.
Why the Other Options Are Wrong
Option A: Resolve the RESPA Escrow Management issue with the escrow analysis exception that does not fit the facts.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Option B: Use borrower preference instead of escrow-analysis requirements.
Use borrower preference instead of escrow-analysis requirements. is not correct because it does not apply the rule tested by this file scenario.
Option D: Wait for a regulator request before correcting the escrow treatment.
Wait for a regulator request before correcting the escrow treatment. is not correct because it does not apply the rule tested by this file scenario.
Memory Technique
escrow-account analysis and shortage treatment: 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 escrow-account analysis and shortage treatment; 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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