A mortgage file is paused during a risk-control review because of TILA QM DTI Calculation. Which answer should choose the most defensible file action?
Correct Answer
D) Verify ability to repay using reliable third-party records
Why this is correct: The question involves a TILA Qualified Mortgage (QM) Debt-to-Income (DTI) calculation. A core requirement for a QM loan is that the lender must make a reasonable, good faith determination of the consumer's ability to repay (ATR) the loan. This determination must be based on verified and reliable documentation, such as third-party records (e.g., W-2s, tax returns, bank statements). Verifying ability to repay using such records is the most defensible action to ensure compliance with the ATR/QM rules. Why the other choices are wrong: "Use an internal exception instead of the required federal disclosure or timing rule" is wrong because ATR is a substantive underwriting requirement, not just a disclosure rule, and cannot be waived by internal policy. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because the ATR determination must be made before consummation of the loan. "Rely on oral agreement when the rule requires documented compliance" is wrong because the ATR rule explicitly requires verification using documented evidence, not unverified oral statements. Exam tip: For ATR/QM questions, the safest answer is the one that involves verifying and documenting the consumer's financial information from reliable sources before closing.
Why This Is the Correct Answer
The correct response is "Verify ability to repay using reliable third-party records" because ATR/QM rules require verified repayment ability and restrict risky QM features.
Why the Other Options Are Wrong
Option A: Use an internal exception instead of the required federal disclosure or timing rule.
Use an internal exception instead of the required federal disclosure or timing rule. is not correct because it does not apply the rule tested by this file scenario.
Option B: 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 C: 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
ATR/QM repayment-ability rules: 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 ATR/QM repayment-ability rules; 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
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