Before closing, the team discovers that a cost changes after the Closing Disclosure has already been provided. What is the safest compliant answer?
Correct Answer
D) Use a corrected Closing Disclosure instead of a revised Loan Estimate
Why this is correct: Per Regulation Z, the corrected Closing Disclosure is the proper tool for cost changes occurring after the initial Closing Disclosure has been provided, as outlined in 12 CFR 1026.19(e)(4)(ii) and 1026.19(f)(2). A revised Loan Estimate is no longer applicable. Why the other choices are wrong: "Ignore redisclosure timing because the borrower verbally accepted the new terms" is wrong because verbal acceptance does not override the legal requirement for timely written disclosures. "Increase disclosed costs based on an internal pricing preference without file-specific support" is wrong because cost increases must be tied to a valid changed circumstance specific to the loan file, not to lender preferences. "Use the revised Loan Estimate only to improve pricing after the borrower shops a competitor" is wrong because a revised Loan Estimate cannot be used for this purpose after the Closing Disclosure has been issued, and shopping a competitor is not a valid changed circumstance for a revised Loan Estimate in this timeline. Exam tip: Safety in compliance means following the strict disclosure sequence: Closing Disclosure issued = switch to corrected Closing Disclosure for changes.
Why This Is the Correct Answer
The correct response is "Use a corrected Closing Disclosure instead of a revised Loan Estimate" because Lines 198-206; 12 CFR 1026.19(e)(4)(ii) and 1026.19(f)(2).
Why the Other Options Are Wrong
Option A: Ignore redisclosure timing because the borrower verbally accepted the new terms.
This choice is a tempting shortcut, but it conflicts with changed-circumstance documentation because the file still needs the required documentation, timing, or rule-based review before the action is taken.
Option B: Increase disclosed costs based on an internal pricing preference without file-specific support.
This choice is a tempting shortcut, but it conflicts with changed-circumstance documentation because the file still needs the required documentation, timing, or rule-based review before the action is taken.
Option C: Use the revised Loan Estimate only to improve pricing after the borrower shops a competitor.
This choice is a tempting shortcut, but it conflicts with changed-circumstance documentation because the file still needs the required documentation, timing, or rule-based review before the action is taken.
Memory Technique
changed-circumstance review: identify the rule being tested, then choose the action that documents or applies that rule before the file moves forward.
Exam Tip
For changed-circumstance documentation questions, separate the required file step from plausible sales, timing, or documentation shortcuts.
Common Mistakes to Avoid
- -Choosing an internal exception instead of the governing rule
- -Treating preliminary or informal facts as a substitute for required documentation
- -Answering from a familiar but unrelated mortgage topic
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?
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Before releasing the final construction draw, which combination most directly supports project completion and clear collateral?
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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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