Which transaction is generally excluded from the Loan Estimate and Closing Disclosure forms even though other federal disclosures may apply?
Correct Answer
C) A reverse mortgage
Why this is correct: The TRID Rule (Regulation Z) specifically excludes reverse mortgages from the requirement to use the Loan Estimate and Closing Disclosure forms. Instead, reverse mortgages use other applicable federal disclosure forms, such as the HECM (Home Equity Conversion Mortgage) loan agreement and related disclosures. Why the other choices are wrong: The choice "A conventional closed-end purchase mortgage secured by real property" is wrong because this is a standard covered transaction that requires TRID disclosures. The choice "A closed-end refinance secured by real property" is wrong because this is also a standard covered transaction under TRID. The choice "A fixed-rate loan used to purchase a principal dwelling" is wrong because this describes a typical covered loan that must receive a Loan Estimate and Closing Disclosure. Exam tip: Remember key TRID exclusions: reverse mortgages, home equity lines of credit (HELOCs), loans secured by mobile homes or dwellings not attached to real property, and certain no-interest loans for down payment assistance.
Why This Is the Correct Answer
Why this is correct: The TRID Rule (Regulation Z) specifically excludes reverse mortgages from the requirement to use the Loan Estimate and Closing Disclosure forms. Instead, reverse mortgages use other applicable federal disclosure forms, such as the HECM (Home Equity Conversion Mortgage) loan agreement and related disclosures. Why the other choices are wrong: The choice "A conventional closed-end purchase mortgage secured by real property" is wrong because this is a standard covered transaction that requires TRID disclosures. The choice "A closed-end refinance secured by real property" is wrong because this is also a standard covered transaction under TRID. The choice "A fixed-rate loan used to purchase a principal dwelling" is wrong because this describes a typical covered loan that must receive a Loan Estimate and Closing Disclosure. Exam tip: Remember key TRID exclusions: reverse mortgages, home equity lines of credit (HELOCs), loans secured by mobile homes or dwellings not attached to real property, and certain no-interest loans for down payment assistance.
More Origination Questions
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During a post-application update, a quality-control reviewer encounters a Credit Analysis and Evaluation issue. Which response should avoid a shortcut that would misapply the rule?
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Before closing, the team discovers that a borrower asks which upfront charge can be collected before intent to proceed. What is the safest compliant answer?
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Before releasing the final construction draw, which combination most directly supports project completion and clear collateral?
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