During intake, a cost changes after the Closing Disclosure has already been provided. What is the best compliant response?
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 (f)(2)), once the creditor has provided the Closing Disclosure, any subsequent changes before consummation must be handled using a corrected Closing Disclosure. A revised Loan Estimate is not permitted at this stage. Therefore, the compliant response is to use a corrected Closing Disclosure. Why the other choices are wrong: "Treat every underwriting condition as a changed circumstance even when it does not affect the charge" is wrong because a changed circumstance must specifically affect a cost or term. "Redisclose only after consummation because the file already has a Closing Disclosure" is wrong because a corrected Closing Disclosure must be provided promptly before closing if a change occurs. "Use a revised disclosure to reset tolerances without a documented event" is wrong because a valid, documented reason is required for any revised or corrected disclosure. Exam tip: The disclosure tool changes based on timeline: before providing the Closing Disclosure, use a revised Loan Estimate; after providing it, use a corrected Closing Disclosure.
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 A: Treat every underwriting condition as a changed circumstance even when it does not affect the charge.
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 B: Redisclose only after consummation because the file already has a Closing Disclosure.
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: 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.
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
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