A processor asks how to handle a file where a closing is approaching and the borrower has not yet received the Closing Disclosure. Which response is most accurate?
Correct Answer
C) Ensure receipt three business days before consummation
Why this is correct: The governing concept is the mandatory waiting period under TRID. Per 12 CFR 1026.19(f)(1)(ii), the consumer must be given the Closing Disclosure at least three business days before consummation. This rule is designed to provide a meaningful review period and is a critical timing requirement. Why the other choices are wrong: "Wait until closing to disclose a known lender-required fee" is wrong because all lender-required fees must be disclosed in good faith on the Loan Estimate and later on the Closing Disclosure well before closing. "Use the lowest advertised provider quote after a different provider has been selected" is wrong because once a specific service provider is selected, the actual quote from that provider must be used for disclosure, not a lower quote from an unselected provider. "Treat a changed provider fee as unlimited solely because it is paid to a third party" is wrong; while some third-party fees have zero tolerance, a change in provider is a specific circumstance with its own rules for tolerance and redisclosure, not an automatic pass. Exam tip: The 3-day rule is a cornerstone of TRID. Any scenario about timing near closing likely tests this rule.
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 A: 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.
Option B: 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 D: 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.
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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