During a disclosure desk review, a risk reviewer encounters a GLBA Privacy Rule issue. Which response should apply the requirement without relying on borrower preference?
Correct Answer
D) Follow privacy notice and opt-out requirements
Why this is correct: The original explanation states that nonpublic personal information must be handled under GLBA privacy limits and notices. The Gramm-Leach-Bliley Act (GLBA) requires financial institutions to provide privacy notices explaining their information-sharing practices and to give consumers an opt-out right for certain shares. Following these notice and opt-out requirements is the rule-based action, independent of any individual borrower's informal preference. Why the other choices are wrong: "Use an internal exception instead of the required federal disclosure or timing rule" is wrong because GLBA mandates are federal law and cannot be overridden by internal policy. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because privacy notices must be provided at specific times (e.g., at account opening). "Rely on oral agreement when the rule requires documented compliance" is wrong because GLBA requires written privacy notices and documented opt-out elections. Exam tip: GLBA is about privacy *notices* and the consumer's right to *opt-out* of sharing with nonaffiliated third parties.
Why This Is the Correct Answer
The correct response is "Follow privacy notice and opt-out requirements" because Nonpublic personal information must be handled under GLBA privacy limits and notices.
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
GLBA privacy requirements: 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 GLBA privacy requirements; 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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