A branch manager asks about a loan file because an outside party asks for borrower bank statements without a permissible basis. What should happen?
Correct Answer
A) Follow privacy limits before sharing nonpublic personal information
Why this is correct: The legal duty arises from Regulation P (12 CFR Part 1016), which implements the GLBA. A request for borrower bank statements from an outside party triggers privacy safeguards. The MLO must first ensure any sharing of this nonpublic personal information complies with the institution's privacy notice and the law's limits. Therefore, the manager must instruct the team to follow privacy limits before sharing. Why the other choices are wrong: "Treat the compliance requirement as optional because closing is near" is wrong because privacy violations are serious and not excused by timing. "Continue processing without correcting the disclosure, licensing, compensation, or consumer-protection issue" is wrong as it advocates for ignoring a known compliance breach across multiple areas, including the critical privacy issue. "Ignore the issue if the borrower orally agrees to continue" is wrong because oral agreement does not satisfy the specific opt-out or consent requirements under privacy regulations for sharing NPI with non-affiliated third parties. Exam tip: In a chain of command, the manager's role is to enforce compliance. The correct answer is always the one that upholds the specific legal requirement.
Why This Is the Correct Answer
The correct response is "Follow privacy limits before sharing nonpublic personal information". Borrower nonpublic personal information is subject to privacy notices and sharing limits.
Why the Other Options Are Wrong
Option B: Treat the compliance requirement as optional because closing is near.
Treat the compliance requirement as optional because closing is near. is not correct because the governing rule requires the compliant answer shown in the explanation.
Option C: Continue processing without correcting the disclosure, licensing, compensation, or consumer-protection issue.
Continue processing without correcting the disclosure, licensing, compensation, or consumer-protection issue. is not correct because the governing rule requires the compliant answer shown in the explanation.
Option D: Ignore the issue if the borrower orally agrees to continue.
Ignore the issue if the borrower orally agrees to continue. is not correct because the governing rule requires the compliant answer shown in the explanation.
Memory Technique
Outside party plus borrower data means pause and verify authority.
Exam Tip
Outside party plus borrower data means pause and verify authority.
Common Mistakes to Avoid
- -Closing a loan does not remove privacy duties for borrower information.
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