A borrower’s pre-service auto loan and pre-service mortgage both carry rates above 6%. The servicer applies relief to one and not the other, on the basis that only mortgages are covered. What is the correct scope?
Correct Answer
A) Apply SCRA protections for eligible active-duty service
Why this is correct: The Servicemembers Civil Relief Act (SCRA) provides specific legal protections, such as interest rate caps and foreclosure stays, for eligible active-duty service members on obligations incurred before active duty. The law requires lenders to apply these protections when the servicemember provides proper notice and meets eligibility criteria. The most defensible action is to proactively apply SCRA protections once eligibility is confirmed, ensuring legal compliance and supporting the servicemember. Why the other choices are wrong: "Assume the SCRA Military Protections condition is met because the borrower satisfied the separate rate-lock requirement" is wrong because SCRA eligibility is based on active-duty status and other specific criteria, not on unrelated loan process steps like rate locks. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because SCRA protections must be applied when triggered, not only upon regulatory scrutiny. "Rely on oral agreement when the rule requires documented compliance" is wrong because SCRA procedures, such as requesting the interest rate cap, typically require written notice or documentation from the servicemember. Exam tip: SCRA protections are not optional. When an eligible servicemember requests them, you must apply the law's requirements.
Why This Is the Correct Answer
The correct response is "Apply SCRA protections for eligible active-duty service" because SCRA protects eligible servicemembers on covered obligations and foreclosure actions.
Why the Other Options Are Wrong
Option B: Assume the SCRA Military Protections condition is met because the borrower satisfied the separate rate-lock 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
SCRA borrower protections: 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 SCRA borrower protections; 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
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 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?
An operations lead is resolving ECOA Prohibited Discrimination Bases during a loan-team coaching session. Which action best fits the rule?
In a file escalation meeting, a disclosure specialist sees facts tied to TILA Closing Disclosure. What should the file reflect?
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