Before closing, the team discovers that the consumer locks the interest rate after the initial disclosure package. What is the safest compliant answer?
Correct Answer
D) Send the revised Loan Estimate within three business days
Why this is correct: Under Regulation Z (the governing federal rule, when a consumer locks an interest rate after receiving the initial Loan Estimate, and this lock necessitates a revision to the disclosed terms, the lender must provide a revised Loan Estimate within three business days. This ensures the consumer has current loan cost information before closing. Why the other choices are wrong: "Resolve the Rate lock revised Loan Estimate timing issue with the asset documentation exception that does not fit the facts" is wrong because misapplying an unrelated exception (like one for asset verification) does not address the specific rate-lock redisclosure rule. "Use the new market rate but keep the old lock documentation unchanged" is wrong because it violates the requirement to provide accurate, updated disclosures reflecting the locked terms. "Move the file to closing without resolving a known lock-expiration conflict" is wrong because proceeding to closing with unresolved disclosure issues is a serious compliance violation. Exam tip: The safest answer is always the one that directly follows the specific regulatory requirement: three-business-day redisclosure for post-initial-disclosure rate locks.
Why This Is the Correct Answer
The correct response is "Send the revised Loan Estimate within three business days". A rate lock requiring revision carries a three business day redisclosure deadline.
Why the Other Options Are Wrong
Option A: Resolve the Rate lock revised Loan Estimate timing issue with the asset documentation exception that does not fit the facts.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Option B: Use the new market rate but keep the old lock documentation unchanged.
This choice is not the best answer because it applies the wrong file step for rate-lock documentation; the governing rule is tested by the correct option.
Option C: Move the file to closing without resolving a known lock-expiration conflict.
This choice is a tempting shortcut, but it conflicts with rate-lock documentation because the file still needs the required documentation, timing, or rule-based review before the action is taken.
Memory Technique
Rate lock plus revised LE equals three business days.
Exam Tip
For rate-lock documentation questions, separate the required file step from plausible sales, timing, or documentation shortcuts.
Common Mistakes to Avoid
- -Borrower-requested rate locks can still require revised written disclosure.
More Origination Questions
Before the team acts on a servicing handoff check, a closing coordinator must address Asset Verification and Reserves. Which response is most defensible?
An MLO is reviewing procedures for a case where a cost changes after the Closing Disclosure has already been provided. What is the proper handling?
During a post-application update, a quality-control reviewer encounters a Credit Analysis and Evaluation issue. Which response should avoid a shortcut that would misapply the rule?
A construction-to-permanent loan will disburse in 5 draws over 11 months before the permanent phase begins. Which Regulation Z appendix provides a disclosure method for multiple-advance construction transactions?
Before closing, the team discovers that a borrower asks which upfront charge can be collected before intent to proceed. What is the safest compliant answer?
A construction loan agreement allows advances only after documented completion of specified work. A builder requests the next draw, but no completion evidence has been provided. What should occur?
Before releasing the final construction draw, which combination most directly supports project completion and clear collateral?
A construction-to-permanent loan will convert to a substantially higher fully amortizing payment. Which payment is especially important when assessing the borrower's long-term repayment capacity?
A construction-to-permanent note states that conversion requires completion, a certificate of occupancy, and no unresolved liens. Construction is finished, but a mechanic's lien remains. What should happen?
A branch manager asks about a loan file because a processor wants to omit known monthly obligations from underwriting. What should happen?
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