A company entering the California market is documenting rules for advertising and consumer-protection controls. Which statement is accurate?
Correct Answer
D) California Financial Code sections 4970-4979.8 define a covered loan as a consumer loan secured by the borrower's principal dwelling with original principal balance not exceeding the conforming loan.
California Financial Code sections 4970-4979.8 define a covered loan as a consumer loan secured by the borrower's principal dwelling with original principal balance not exceeding the conforming loan limit and either an APR trigger or total points and fees exceeding 6% of the total loan amount; in a $250,000 example, 6% equals $15,000.
Why This Is the Correct Answer
California Financial Code sections 4970-4979.8 define a covered loan as a consumer loan secured by the borrower's principal dwelling with original principal balance not exceeding the conforming loan. This is correct because California Financial Code sections 4970-4979.8 define a covered loan as a consumer loan secured by the borrower's principal dwelling with original principal balance not exceeding the conforming loan limit and either an APR trigger or total points and fees exceeding 6% of the total loan amount; in a $250,000 example, 6% equals $15,000.
Why the Other Options Are Wrong
Option A: Apply the rule only after the California regulator has already opened an examination.
Apply the rule only after the California regulator has already opened an examination. is not correct because the governing rule requires the compliant answer shown in the explanation.
Option B: Skip the California requirement because the company already follows general SAFE Act procedures.
Skip the California requirement because the company already follows general SAFE Act procedures. is not correct because the governing rule requires the compliant answer shown in the explanation.
Option C: Treat advertising and consumer-protection controls as optional because the company has a general California compliance policy.
Treat advertising and consumer-protection controls as optional because the company has a general California compliance policy. is not correct because the governing rule requires the compliant answer shown in the explanation.
Memory Technique
CA -> advertising and consumer-protection controls
Exam Tip
Identify the California state requirement first, then choose the answer that preserves licensing, disclosure, record, supervision, or enforcement compliance.
Common Mistakes to Avoid
- -Using a generic national rule when the California state requirement controls
- -Treating California licensing, reporting, advertising, records, or enforcement duties as optional
More UST Questions
In a pricing desk question, an audit analyst sees facts tied to Prohibited Misrepresentation. What should the file reflect?
An applicant previously had an MLO license revoked by a state regulator. Under the SAFE Act minimum standards for a new state-licensed MLO license, which statement is correct?
Which statement correctly distinguishes a license suspension from a license revocation?
A state regulator has issued an order suspending an MLO's authority effective immediately. The MLO has filed an appeal, but no stay has been granted. What should the MLO do?
An MLO license application asks whether the applicant has been the subject of a regulatory order. The applicant has a recent consent order that falls within the question. What is the proper response?
Why does NMLS maintain licensing and enforcement information that participating regulators can access?
A regulator issues a final license suspension without giving the MLO notice of the alleged violation or any opportunity to respond, even though applicable law requires both. What issue is presented?
A regulator finds that an MLO charged consumers prohibited fees. Which set of actions is consistent with the enforcement tools contemplated by Regulation H?
An MLO's license status in NMLS changes to suspended, with no stay or reinstatement shown. What is the immediate operational effect?
Which fact most directly supports disciplinary action against an MLO rather than merely a request for additional application information?
People Also Study
Federal Mortgage-Related Laws
24% of exam
General Mortgage Knowledge
20% of exam
Mortgage Loan Origination Activities
27% of exam
Ethics, Fraud & Consumer Protection
18% of exam