A borrower-facing employee is unsure what to do when a cost changes after the Closing Disclosure has already been provided. What is the correct response?
Correct Answer
A) Use a corrected Closing Disclosure instead of a revised Loan Estimate
Why this is correct: The rule under Regulation Z (12 CFR 1026.19(e)(4)(ii) and 1026.19(f)(2)) mandates that after the Closing Disclosure is provided, any change in costs must be addressed with a corrected Closing Disclosure, not a revised Loan Estimate. Why the other choices are wrong: "Treat a rate lock as a changed circumstance for unrelated settlement fees" is wrong because a rate lock does not constitute a valid changed circumstance for increasing fees that are not directly related to the lock. "Use prior appraisal review approval as a substitute for the current Closing Disclosure after revised Loan Estimate cutoff requirement" is wrong because prior approvals do not substitute for the specific corrected Closing Disclosure procedure required post-Closing Disclosure. "Increase disclosed costs based on an internal pricing preference without file-specific support" is wrong because cost increases require a valid, file-specific changed circumstance, not internal lender preferences. Exam tip: For borrower-facing staff, the simple rule is: After giving the Closing Disclosure, always use a corrected Closing Disclosure for cost 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 B: Treat a rate lock as a changed circumstance for unrelated settlement fees.
This choice is not the best answer because it applies the wrong file step for changed-circumstance documentation; the governing rule is tested by the correct option.
Option C: Use prior appraisal review approval as a substitute for the current Closing Disclosure after revised Loan Estimate cutoff 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: 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.
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?
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