In a mortgage origination file, a cost changes after the Closing Disclosure has already been provided. Which action should be taken?
Correct Answer
B) Use a corrected Closing Disclosure instead of a revised Loan Estimate
Why this is correct: Under Regulation Z, once the Closing Disclosure has been provided, the method for correcting a cost change is exclusively a corrected Closing Disclosure, as per 12 CFR 1026.19(e)(4)(ii) and 1026.19(f)(2). A revised Loan Estimate is not permitted at this stage. Why the other choices are wrong: "Resolve the Closing Disclosure after revised Loan Estimate cutoff issue with the licensing exception that does not fit the facts" is wrong because licensing exceptions do not override TILA-RESPA integrated disclosure rules. "Ignore redisclosure timing because the borrower verbally accepted the new terms" is wrong because verbal acceptance does not waive the mandatory written disclosure timing requirements. "Increase disclosed costs based on an internal pricing preference without file-specific support" is wrong because any cost increase must be supported by a valid changed circumstance specific to the borrower's transaction. Exam tip: The phrase 'corrected Closing Disclosure instead of a revised Loan Estimate' is a direct quote from the rule—memorize it as the answer for post-Closing Disclosure changes.
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: Resolve the Closing Disclosure after revised Loan Estimate cutoff issue with the licensing 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 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
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
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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