In a training scenario, a cost changes after the Closing Disclosure has already been provided. What action best follows the rule?
Correct Answer
B) Use a corrected Closing Disclosure instead of a revised Loan Estimate
Why this is correct: The governing principle is that once the Closing Disclosure has been issued, the regulatory path for changes shifts from revised Loan Estimates to corrected Closing Disclosures, as specified in 12 CFR 1026.19(e)(4)(ii) and 1026.19(f)(2). Why the other choices are wrong: "Redisclose only after consummation because the file already has a Closing Disclosure" is wrong because this would violate the requirement to provide a corrected Closing Disclosure before consummation when a change occurs. "Use a revised disclosure to reset tolerances without a documented event" is wrong because a revised disclosure requires a valid changed circumstance; it cannot be used to reset tolerances without cause. "Treat a rate lock as a changed circumstance for unrelated settlement fees" is wrong because a rate lock does not justify increasing fees that are unrelated to the lock. Exam tip: In scenario questions, the phrase 'after the Closing Disclosure has already been provided' is your cue to select corrected Closing Disclosure.
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: 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 C: 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.
Option D: 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.
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
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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 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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