A branch manager asks about a loan file because a closing is approaching and the borrower has not yet received the Closing Disclosure. What should happen?
Correct Answer
A) Ensure receipt three business days before consummation
Why this is correct: The TRID rule requires that the borrower receives the Closing Disclosure at least three business days before consummation (the governing federal rule This is a fundamental timing requirement to ensure the borrower has adequate opportunity to review final loan terms and costs. Therefore, the manager must ensure receipt three business days before consummation. Why the other choices are wrong: "Move the fee to a different category to avoid a tolerance cure" is wrong because moving fees between categories to manipulate tolerance calculations is not permitted; fees must be disclosed in the correct category based on the regulation. "Increase a zero-tolerance charge because the borrower accepted the cost verbally" is wrong because zero-tolerance charges (like the lender's own fees) generally cannot increase at all, and verbal acceptance does not override this written disclosure requirement. "Wait until closing to disclose a known lender-required fee" is wrong because known fees must be disclosed in good faith on the Loan Estimate and later on the Closing Disclosure; waiting until closing violates the advance disclosure rules. Exam tip: The three-day rule is about borrower receipt, not when you mail it. Plan for delivery confirmation.
Why This Is the Correct Answer
The correct response is "Ensure receipt three business days before consummation" because Lines 205-206; 12 CFR 1026.19(f)(1)(ii).
Why the Other Options Are Wrong
Option B: 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.
Option C: Increase a zero-tolerance charge because the borrower accepted the cost verbally.
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: Wait until closing to disclose a known lender-required fee.
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
Closing Disclosure timing: 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
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?
A construction loan agreement allows advances only after documented completion of specified work. A builder requests the next draw, but no completion evidence has been provided. What should occur?
Before releasing the final construction draw, which combination most directly supports project completion and clear collateral?
A construction-to-permanent loan will convert to a substantially higher fully amortizing payment. Which payment is especially important when assessing the borrower's long-term repayment capacity?
A construction-to-permanent note states that conversion requires completion, a certificate of occupancy, and no unresolved liens. Construction is finished, but a mechanic's lien remains. What should happen?
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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