No later than three business days before signing loan documents for a California covered loan, what consumer notice must the originator provide?
Correct Answer
A) The Consumer Caution and Home Ownership Counseling Notice
Financial Code section 4973 requires the Consumer Caution and Home Ownership Counseling Notice no later than three business days before signing loan documents. The prior legacy version overstated this as mandatory completed HUD counseling before consummation.
Why This Is the Correct Answer
Financial Code section 4973 requires the Consumer Caution and Home Ownership Counseling Notice no later than three business days before signing loan documents. The prior legacy version overstated this as mandatory completed HUD counseling before consummation.
Why the Other Options Are Wrong
Option B: A home inspection report prepared by a licensed contractor
Home inspections are related to property condition, not loan qualification. They are not required by predatory lending law.
Option C: Three competing written loan offers from other lenders
There is no requirement to provide competing offers. Anti-steering rules address this differently.
Option D: A legal opinion from an attorney selected by the lender
Attorney opinion letters are not required by California's predatory lending statute.
Memory Technique
CA -> ca-covered-loans-high-cost-consumer-protections
Exam Tip
Covered-loan questions often test the 8-point APR trigger, 6 percent points-and-fees trigger, principal-dwelling scope, Consumer Caution notice timing, ATR, prepayment penalty limits, prohibited loan terms, and remedies.
Common Mistakes to Avoid
- -Using a national baseline answer when California has agency-specific DFPI or DRE requirements
- -Confusing CFL, CRMLA, covered-loan, usury, servicing, and DRE endorsement rules
- -Relying on legacy California state-exam or education assumptions instead of current NMLS source pages
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