Before the loan advances, a loan file reviewer must resolve a TILA RESPA Tolerance Rules issue in a record-retention audit. What should happen?
Correct Answer
B) Use a valid changed circumstance before increasing a fee
Why this is correct: Under TRID tolerance rules, a fee estimated on the Loan Estimate generally cannot be increased on the Closing Disclosure unless a valid "changed circumstance" occurs (e.g., unexpected title issue, borrower-requested change). The correct answer, "Use a valid changed circumstance before increasing a fee," states the proper, legal process. The lender must identify a permissible reason, document it, and then provide a revised disclosure within allowed timeframes. Why the other choices are wrong: "Leave the Loan Estimate unchanged after the creditor learns the disclosed charge is inaccurate" is wrong because knowingly providing an inaccurate estimate and failing to issue a corrected disclosure is a violation. "Cure a tolerance problem by renaming the fee instead of documenting or refunding the variance" is wrong because fee mischaracterization is illegal; the proper cure for an overage beyond tolerance is a refund to the borrower. "Move the fee to a different category to avoid a tolerance cure" is wrong for the same reason; it is an intentional misclassification to circumvent refund obligations. Exam tip: A fee increase is only justified by a valid changed circumstance. If the question involves increasing a cost, look for this concept.
Why This Is the Correct Answer
The correct response is "Use a valid changed circumstance before increasing a fee" because TRID fee disclosures and tolerance categories govern estimates, revisions, and closing-cost comparison.
Why the Other Options Are Wrong
Option A: Leave the Loan Estimate unchanged after the creditor learns the disclosed charge is inaccurate.
This choice is not the best answer because it applies the wrong file step for fee disclosure and tolerance treatment; the governing rule is tested by the correct option.
Option C: Cure a tolerance problem by renaming the fee instead of documenting or refunding the variance.
This choice is a tempting shortcut, but it conflicts with fee disclosure and tolerance treatment because the file still needs the required documentation, timing, or rule-based review before the action is taken.
Option D: Move the fee to a different category to avoid a tolerance cure.
This choice is not the best answer because it applies the wrong file step for fee disclosure and tolerance treatment; the governing rule is tested by the correct option.
Memory Technique
TILA RESPA Tolerance Rules: identify the rule being tested, then choose the action that documents or applies that rule before the file moves forward.
Exam Tip
For fee disclosure and tolerance treatment 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
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