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?
Correct Answer
C) Use a corrected Closing Disclosure instead of a revised Loan Estimate
Why this is correct: Under Regulation Z (12 CFR 1026.19(e)(4)(ii) and 1026.19(f)(2)), once the Closing Disclosure has been provided, the proper tool for handling a subsequent cost change is a corrected Closing Disclosure. A revised Loan Estimate is no longer permissible after this point. Why the other choices are wrong: "Use a revised disclosure to reset tolerances without a documented event" is wrong because a revised disclosure requires a valid changed circumstance; it cannot be used arbitrarily. "Resolve the Closing Disclosure after revised Loan Estimate cutoff issue with the closing disclosure exception that does not fit the facts" is wrong because it misapplies exceptions and does not follow the clear rule to use a corrected Closing Disclosure. "Ignore redisclosure timing because the borrower verbally accepted the new terms" is wrong because verbal acceptance does not waive the mandatory written disclosure requirements and timing rules under TILA-RESPA. Exam tip: Remember the sequence: Loan Estimate first, then Closing Disclosure. After the Closing Disclosure is given, fix problems with a corrected Closing Disclosure, not by going back to a revised Loan Estimate.
Why This Is the Correct Answer
The correct response is "Use a corrected Closing Disclosure instead of a revised Loan Estimate". Once the Closing Disclosure has been provided, the cure path is through corrected Closing Disclosure rules, not a new revised Loan Estimate.
Why the Other Options Are Wrong
Option A: Use a revised disclosure to reset tolerances without a documented event.
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: Resolve the Closing Disclosure after revised Loan Estimate cutoff issue with the closing disclosure 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 D: 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.
Memory Technique
After the Closing Disclosure appears in the fact pattern, think corrected CD.
Exam Tip
For changed-circumstance documentation questions, separate the required file step from plausible sales, timing, or documentation shortcuts.
Common Mistakes to Avoid
- -Students sometimes keep using revised Loan Estimates too late in the process.
More Origination Questions
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