A mortgage file is paused during a risk-control review because of ECOA Adverse Action Notice. Which answer should explain the required action to the team?
Correct Answer
A) Send the required adverse-action notice
Why this is correct: As with the previous ECOA question, the core requirement is clear: when an adverse action is taken (denial, incomplete application, etc.), ECOA and Regulation B mandate that a specific written adverse action notice be sent to the applicant. The correct answer, "Send the required adverse-action notice," is the direct and mandatory action to resolve the issue. Why the other choices are wrong: "Use prior fee tolerance approval as a substitute for the current ECOA Adverse Action Notice requirement" is wrong because fee tolerances are a TRID concept unrelated to the separate ECOA notice requirement. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because the notice must be sent promptly, not upon regulatory inquiry. "Rely on oral agreement when the rule requires documented compliance" is wrong because the adverse action notice must be in writing. Exam tip: The adverse action notice is non-negotiable under ECOA. Any pause in a file due to an adverse action should immediately trigger this notice process.
Why This Is the Correct Answer
The correct response is "Send the required adverse-action notice" because ECOA/Regulation B prohibits discrimination and requires action notices and valuation copies.
Why the Other Options Are Wrong
Option B: Use prior fee tolerance approval as a substitute for the current ECOA Adverse Action Notice 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
ECOA and Regulation B: 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 ECOA and Regulation B; 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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