A risk reviewer compares the file facts with TILA APR Accuracy Tolerance during a new-hire scenario. Which conclusion is accurate?

Correct Answer

C) Base the answer on the covered-credit disclosure rule

Why this is correct: The Truth in Lending Act (TILA), implemented by Regulation Z, mandates accurate disclosure of key loan terms, including the Annual Percentage Rate (APR). The APR has specific accuracy tolerances. To determine if an APR is accurate, one must base the analysis on the rules for the specific type of credit transaction, which are found in the "covered-credit disclosure rule"—that is, the relevant provisions of Regulation Z. Therefore, "Base the answer on the covered-credit disclosure rule" is the correct, methodical approach. Why the other choices are wrong: "Use prior document-retention approval as a substitute for the current TILA APR Accuracy Tolerance requirement" is wrong because document retention rules are separate from the substantive accuracy calculations required for APR disclosures. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because APR accuracy is a mandatory disclosure requirement at consummation, not something applied later. "Rely on oral agreement when the rule requires documented compliance" is wrong because APR must be disclosed in writing with precision; oral agreements are irrelevant to its calculation and tolerance. Exam tip: For TILA/Reg Z accuracy questions, the answer always comes from applying the specific disclosure rules for that credit product. Do not substitute other procedural requirements.