A compliance review finds that a closing is approaching and the borrower has not yet received the Closing Disclosure. What should the MLO do next?
Correct Answer
B) Ensure receipt three business days before consummation
Why this is correct: The governing concept is the mandatory pre-consummation waiting period for the Closing Disclosure. Under 12 CFR 1026.19(f)(1)(ii), the consumer must receive the Closing Disclosure at least three business days before consummation. This rule is absolute and ensures the borrower has time to review final loan terms. Why the other choices are wrong: "Use the lowest advertised provider quote after a different provider has been selected" is wrong because the Good Faith Estimate rules require using the actual provider's quote once selected, not a lower advertised quote from a different provider. "Treat a changed provider fee as unlimited solely because it is paid to a third party" is wrong because while some third-party fees have a zero tolerance, a changed provider fee is subject to specific changed circumstance rules, not an automatic unlimited tolerance. "Leave the Loan Estimate unchanged after the creditor learns the disclosed charge is inaccurate" is wrong because inaccuracy generally triggers a duty to redisclose with a revised Loan Estimate or corrected Closing Disclosure. Exam tip: The 3-day waiting period is based on receipt, not just sending. Confirm borrower receipt to start the clock.
Why This Is the Correct Answer
The correct response is "Ensure receipt three business days before consummation". The Closing Disclosure is a pre-consummation disclosure, so receipt must occur at least three business days before consummation.
Why the Other Options Are Wrong
Option A: Use the lowest advertised provider quote after a different provider has been selected.
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: Treat a changed provider fee as unlimited solely because it is paid to a third party.
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: 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.
Memory Technique
Closing Disclosure means three business days before consummation.
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
- -Closing Disclosure timing is not satisfied by same-day delivery at settlement.
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?
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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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