During a borrower intake review, a compliance analyst encounters a TILA Right of Rescission issue. Which response should avoid a shortcut that would misapply the rule?
Correct Answer
C) Count the rescission period under the TILA rule
Why this is correct: The Truth in Lending Act (TILA) grants a right of rescission for certain loans (typically refinances) secured by the borrower's principal dwelling. The governing concept is that the borrower has a three-business-day period to rescind the transaction after receiving proper disclosures. The correct, rule-based response is to accurately count this rescission period as required by TILA, ensuring the borrower's right is preserved. Why the other choices are wrong: "Assume the TILA Right of Rescission condition is met because the borrower satisfied the separate consumer complaint requirement" is wrong because rescission rights are triggered by specific TILA conditions (like the type of lien and property), not by filing a separate complaint. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because TILA rescission rights and timing are mandatory legal requirements that must be followed at loan closing, not deferred. "Rely on oral agreement when the rule requires documented compliance" is wrong because TILA rescission requires proper written disclosures and a written notice of rescission from the borrower; oral agreements are insufficient. Exam tip: For TILA rescission, remember it applies mainly to non-purchase loans on a principal dwelling. The clock starts when the last required disclosure is delivered.
Why This Is the Correct Answer
The correct response is "Count the rescission period under the TILA rule" because TILA rescission rights protect consumers with ownership interests in a principal dwelling.
Why the Other Options Are Wrong
Option A: Assume the TILA Right of Rescission condition is met because the borrower satisfied the separate consumer complaint requirement.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
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 D: 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
TILA right of rescission: 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 TILA right of rescission; 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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