An MLO is reviewing procedures for a case where the consumer locks the interest rate after the initial disclosure package. What is the proper handling?
Correct Answer
C) Send the revised Loan Estimate within three business days
Why this is correct: Per TRID regulations (the governing federal rule, if an interest rate lock after the initial Loan Estimate alters disclosed terms, a revised Loan Estimate must be sent to the borrower within three business days. The original explanation references this rule. Therefore, "Send the revised Loan Estimate within three business days" is the correct procedural response. Why the other choices are wrong: "Move the file to closing without resolving a known lock-expiration conflict" is incorrect because closing with an unresolved expiration risks inaccurate disclosures and non-compliance. "Assume the Rate lock revised Loan Estimate timing condition is met because the borrower satisfied the separate flood insurance requirement" is wrong because fulfilling unrelated requirements (like flood insurance) does not satisfy the specific redisclosure timing rule for rate locks. "Change locked terms without documenting the lock agreement and borrower authorization" is prohibited as term changes require documented agreement. Exam tip: The 3-business-day clock for a revised Loan Estimate starts when the rate lock changes terms, regardless of other file milestones.
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: 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.
Option B: Assume the Rate lock revised Loan Estimate timing condition is met because the borrower satisfied the separate flood insurance requirement.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Option D: Change locked terms without documenting the lock agreement and borrower authorization.
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?
People Also Study
Federal Mortgage-Related Laws
24% of exam
General Mortgage Knowledge
20% of exam
Ethics, Fraud & Consumer Protection
18% of exam
Uniform State Test Content
11% of exam
Related Study Resources
Previous Question
Before closing, the team discovers that the consumer locks the interest rate after the initial disclosure package. What is the safest compliant answer?
Next Question
Before the team acts on a branch training session, the branch manager must address Conflicts of Interest. Which response is most defensible?