Certified Regulatory Compliance Manager (CRCM) — Question 291

First National Bank sold several of its mortgage loans to individual investors and now services the loans for the individuals. First National Bank collects more than
$600 on most of these mortgages and deposits the money into the account of the investors. At the end of each year, First National Bank sends the investors a summary of transactions on the mortgages and a detailed breakdown of the principal and interest payments made. Who is responsible for filing the mortgage interest information returns?

Answer options

• A. The investors, because they own the loans and the money is collected for them
• B. The investors, because they have the necessary information from the servicer
• C. First National Bank, because it was the first owner of the loans
• D. First National Bank, because it collects the interest and has the information necessary to file the information return

Correct answer: D

Explanation

The correct answer is D because First National Bank is responsible for collecting the interest and has the necessary information to file the returns. Options A and B incorrectly place the responsibility on the investors, who do not have the required filing obligations in this scenario. Option C is incorrect as the original ownership does not determine responsibility for filing the information returns.