The right of rescission is a provision under TILA (Truth in Lending Act) that gives borrowers the right to cancel certain types of loans within three business days after closing. This right applies specifically to refinance transactions on a borrower's primary residence, where they are taking cash out or refinancing their mortgage.
* Cash-out refinances on a primary residence (C) are subject to the right of rescission because they involve the homeowner's primary residence.
* Purchase loans (A) and loans secured by vacation homes (B) or other investment properties are not subject to this rule.
* Even if the same creditor is refinancing the loan (Option D), the right of rescission still applies if it's a refinance of the primary residence.
References:
* Truth in Lending Act (TILA) Section 125
* Regulation Z, 12 CFR §1026.23 on the right of rescission

Lenders may consider whether alimony, child support, or separate maintenance payments are likely to be consistently made, as this affects the borrower's ability to repay. Consideration of family status, phone listings, or age (except as required for legal capacity) is prohibited by the Equal Credit Opportunity Act (ECOA).
"A creditor must consider alimony, child support, or separate maintenance income to the extent that it is likely to be consistently received."
- 12 CFR § 1002.6(b)(5), Regulation B (ECOA)
References:
CFPB, Considering Alimony and Child Support
SAFE MLO National Test Study Guide

Mortgage loan originators are bound by ethical and legal requirements to disclose any material changes in a loan application that could affect the underwriting decision. Discovering that the property is no longer the borrower's primary residence is a significant change and may affect loan terms, program eligibility, and disclosures. According to the SAFE Act and industry best practices, the MLO must immediately report such information to their employer and/or the lender.
"A mortgage loan originator has a duty to promptly notify the lender of any material change in the application or circumstances of the borrower that could impact loan eligibility or the terms of the loan."
- SAFE MLO National Test Study Guide; NMLS UST Outline
Other options fail to fulfill the MLO's legal and ethical obligations and could be construed as misrepresentation or fraud.
References:
SAFE MLO National Test Study Guide
NMLS Uniform State Content Outline
CFPB, Mortgage Origination Rules

A quit claim deed is a legal document used in real estate transactions to convey ownership or interest in a property from one party to another. It transfers the grantor's interest in the property without any warranties or guarantees about the property's title.
* Promissory notes (B) represent a borrower's promise to repay a loan.
* Mortgage instruments (C) create a lien on the property but do not convey ownership.
* Occupancy certificates (D) certify that a property complies with regulations for occupancy but are not involved in transferring ownership.
References:
* Real Estate Law on property conveyances
* Fannie Mae Deed and Title Transfer Guidelines

Under the SAFE Act, a mortgage loan originator (MLO) cannot be approved for licensure if they have been convicted of a felony within the past seven years, or at any time if the felony involved fraud, dishonesty, breach of trust, or money laundering. This provision ensures that individuals with serious criminal backgrounds are not permitted to operate as MLOs.
* Other factors, such as failing the SAFE MLO test (C) or having never been licensed (D), do not automatically disqualify an applicant from obtaining an MLO license.
References:
* SAFE Act, 12 USC §5104
* NMLS Licensing Requirements