A file shows a borrower who qualified for a fixed-rate loan being placed in an interest-only product that paid the originator more. What does the record have to show instead?
Correct Answer
D) Avoid risky features when the safe-harbor category requires it
Why this is correct: Anti-steering rules prohibit recommending a loan because it benefits the loan originator more than the consumer. The safe-harbor provision requires presenting loan options that meet specific criteria, including that the loan cannot have certain risky features (like negative amortization or interest-only payments) if the safe harbor is to be used. "Avoid risky features when the safe-harbor category requires it" correctly applies this condition. Why the other choices are wrong: "Use compensation to decide which qualified loan option to recommend" is the definition of illegal steering. "Give a token list of options without a meaningful lower-rate or lower-cost alternative" violates the safe-harbor requirement to present a genuine range of options. "Omit the no-risky-features option because it is less profitable" is steering and also fails the safe-harbor test. Exam tip: The safe harbor isn't just about presenting options; the options themselves must lack certain risky features to qualify.
Why This Is the Correct Answer
The correct response is "Avoid risky features when the safe-harbor category requires it" because Anti-steering rules restrict steering consumers to loans that increase compensation without being in the consumer interest.
Why the Other Options Are Wrong
Option A: Use compensation to decide which qualified loan option to recommend.
This choice is not the best answer because it applies the wrong file step for anti-steering safeguards; the governing rule is tested by the correct option.
Option B: Give a token list of options without a meaningful lower-rate or lower-cost alternative.
This choice is a tempting shortcut, but it conflicts with anti-steering safeguards because the file still needs the required documentation, timing, or rule-based review before the action is taken.
Option C: Omit the no-risky-features option because it is less profitable.
This choice is a tempting shortcut, but it conflicts with anti-steering safeguards because the file still needs the required documentation, timing, or rule-based review before the action is taken.
Memory Technique
anti-steering rules: identify the rule being tested, then choose the action that documents or applies that rule before the file moves forward.
Exam Tip
For anti-steering safeguards questions, separate the required file step from plausible sales, timing, or documentation shortcuts.
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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