A branch manager asks about a loan file because a valid changed circumstance raises a fee before the Closing Disclosure has been issued. What should happen?
Correct Answer
A) Issue a revised Loan Estimate within three business days
Why this is correct: The correct procedure, per 12 CFR 1026.19(e)(3)(iv) and (e)(4)(i), is that a valid changed circumstance permitting a fee increase before the Closing Disclosure is issued requires the creditor to provide a revised Loan Estimate. This must be done within three business days after the creditor receives information sufficient to establish the changed circumstance. Why the other choices are wrong: "Treat a rate lock as a changed circumstance for unrelated settlement fees" is wrong because a rate lock is not a valid changed circumstance that justifies increasing fees unrelated to the lock itself. "Ignore redisclosure timing because the borrower verbally accepted the new terms" is wrong because the three-business-day timing rule is a regulatory mandate, not waivable by verbal agreement. "Increase disclosed costs based on an internal pricing preference without file-specific support" is wrong because any fee increase must be supported by a valid, file-specific changed circumstance, not internal business preferences. Exam tip: Borrower verbal agreement never overrides the mandatory timing and disclosure rules of TRID.
Why This Is the Correct Answer
The correct response is "Issue a revised Loan Estimate within three business days". A valid changed circumstance permits a revised Loan Estimate, but the timing window is still three business days after sufficient information is received.
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: 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 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 questions usually test both the reason and the timing.
Exam Tip
For changed-circumstance documentation questions, separate the required file step from plausible sales, timing, or documentation shortcuts.
Common Mistakes to Avoid
- -Do not assume every cost increase is barred; the issue is whether a valid changed circumstance supports redisclosure.
More Origination Questions
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