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Question 1 of 4

1. Question
A mortgage lender originates a residential loan and properly retains the borrower’s Closing Disclosure and related settlement documents. Three years later, the lender sells both the servicing rights and ownership interest in the mortgage loan to another financial institution. During a later CFPB audit, regulators request copies of the original Closing Disclosure documents, but the originating lender claims it no longer has any responsibility because the loan was transferred years earlier.

Regulators determine the lender failed to comply with Regulation Z document-retention requirements.

Which statement best explains why?
- A) Closing Disclosure documents must only be retained while the originating lender services the loan
- B) Once servicing rights are sold, all Closing Disclosure retention obligations immediately terminate
- C) If the lender disposes of its mortgage interest and no longer services the loan, it must transfer the Closing Disclosure records to the new owner or servicer for retention during the remainder of the required five-year period
- D) Closing Disclosure retention requirements apply only to federally insured mortgage loans
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Question 2 of 4

2. Question
During a routine compliance review, regulators discover that a mortgage company automatically deletes all Closing Disclosure records two years after settlement in order to reduce storage costs. Company management argues that most investor repurchase exposure expires within that timeframe and continued storage is unnecessary.

Why could this practice violate Regulation Z requirements?
- A) Closing Disclosure retention requirements apply only to refinance loans
- B) Closing Disclosure records generally must be retained for five years after settlement
- C) Lenders may destroy Closing Disclosure records once the borrower begins repayment
- D) Electronic storage requirements apply only to government-backed mortgage loans
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Question 3 of 4

3. Question
A lender prepares a Closing Disclosure for a residential mortgage transaction scheduled to fund several days after consummation. During final review, a compliance specialist questions whether the projected disbursement date should appear within the Closing Disclosure because loan proceeds have not yet been released.

Which statement best reflects Regulation Z disclosure guidance?
- A) Disbursement dates may not appear on the Closing Disclosure until funding actually occurs
- B) Disbursement dates are disclosed only on refinance transactions
- C) Loan disbursement dates are disclosed only to settlement agents and investors
- D) The Closing Disclosure provides details regarding the disbursement date used for the transaction
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Question 4 of 4

4. Question
A lender prepares the first page of a Closing Disclosure and includes the names of the borrowers, real estate agents, seller, and settlement agent under the “Borrower” heading because all parties participated in the transaction.

During a post-closing audit, compliance personnel identify a disclosure error.

Which statement best reflects Regulation Z requirements?
- A) Only the names and addresses of persons to whom credit is offered or extended should appear under the “Borrower” label
- B) All parties involved in the transaction must appear under the “Borrower” heading
- C) Sellers and settlement agents are always disclosed together with borrowers on the first page
- D) Real estate agents must appear under the “Borrower” section whenever commissions are financed
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