Loan Officer Practice Exam

Which disclosure can a mortgage loan applicant expect to receive within three business days of submitting a complete application?

1. Closing Disclosure

2. Initial Escrow Statement

3. AfBA Disclosure

4. Settlement Agreement

The correct answer is: AfBA Disclosure

A mortgage loan applicant can expect to receive the AfBA Disclosure within three business days of submitting a complete application. The Affiliated Business Arrangement (AfBA) Disclosure is a requirement under the Real Estate Settlement Procedures Act (RESPA), which mandates that lenders inform borrowers about any affiliated businesses involved in the transaction. This disclosure is designed to ensure transparency regarding relationships that could potentially affect the costs of the settlement services provided. The closing disclosure, initial escrow statement, and settlement agreement are related to different stages of the loan process, but they do not have the same immediate time frame requirement as the AfBA Disclosure. For instance, the closing disclosure is usually provided at least three business days before closing, while the initial escrow statement is provided after the closing, generally within a specific period thereafter. The settlement agreement is not a standard disclosure that would be delivered upon application submission but rather is more relevant to the final stages of a real estate transaction. Thus, the AfBA Disclosure stands out as the one that is required within the immediate three-day window following a complete application.