A team asks whether the valuation copy rule applies to an application for a second mortgage behind an existing first lien on the same dwelling. How is the question answered?
Correct Answer
D) Provide valuation copies promptly or three business days before closing
Why this is correct: The governing rule is Regulation B (ECOA), specifically 12 CFR 1002.14(a)(1). For covered first-lien dwelling-secured loans, the creditor must provide the applicant a copy of all appraisals and other written valuations promptly upon completion, or no later than three business days before closing, whichever is earlier. The appraisal is complete, so this timing rule is triggered. Why the other choices are wrong: "Use an internal exception instead of the required federal disclosure or timing rule" is wrong because internal policies cannot override federal Regulation B requirements. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because compliance must be proactive; waiting for a regulator is a violation. "Assume the ECOA appraisal and valuation copies condition is met because the borrower satisfied the separate closing disclosure requirement" is wrong because the TRID Closing Disclosure rule under TILA-RESPA is separate and does not fulfill the specific ECOA requirement to provide the valuation copy itself. Exam tip: For first-lien dwelling loans, think 'promptly or 3 days before closing, whichever is earlier' for appraisal copies. This is a strict ECOA deadline.
Why This Is the Correct Answer
The correct response is "Provide valuation copies promptly or three business days before closing" because Lines 42-54; 12 CFR 1002.14(a)(1).
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: Assume the ECOA appraisal and valuation copies condition is met because the borrower satisfied the separate closing disclosure requirement.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
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
More Federal Laws Questions
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