A mortgage team asks a compliance manager about ECOA and Regulation B during a new-license application. Which answer should guide the file?
Correct Answer
A) Provide appraisal and valuation copies on time
Why this is correct: The Equal Credit Opportunity Act (ECOA), enforced via Regulation B, has several key requirements. One is the prohibition of discrimination in any aspect of a credit transaction. Another specific rule is that applicants have the right to receive a copy of all appraisals and valuations developed in connection with an application for a loan secured by a first lien on a dwelling, and these copies must be provided promptly (generally within three business days after completion or at closing, whichever is earlier). The correct answer, "Provide appraisal and valuation copies on time," directly addresses this clear, time-bound regulatory duty. Why the other choices are wrong: "Delay the ECOA Adverse Action Notices step until a later income calculation review instead of acting now" is wrong because adverse action notices have their own strict timing requirements (30 days) that cannot be delayed. "Wait until a regulator asks for the file before applying the federal requirement" is non-compliant. "Rely on oral agreement when the rule requires documented compliance" is incorrect, as providing copies is a documented action. Exam tip: For ECOA/Reg B, remember the twin pillars: non-discrimination and specific procedural rules like providing appraisal copies and adverse action notices.
Why This Is the Correct Answer
The correct response is "Provide appraisal and valuation copies on time" because ECOA/Regulation B prohibits discrimination and requires action notices and valuation copies.
Why the Other Options Are Wrong
Option B: Delay the ECOA Adverse Action Notices step until a later income calculation review instead of acting now.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Option C: 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
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
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