A processor asks how to handle a file where the consumer locks the interest rate after the initial disclosure package. Which response is most accurate?
Correct Answer
A) Send the revised Loan Estimate within three business days
Why this is correct: Per 12 CFR 1026.19(e)(3)(iv)(D), locking a rate after the initial Loan Estimate is issued is a valid reason for issuing a revised Loan Estimate if it affects points or lender credits. The revised estimate must be provided within three business days of the rate lock. This is the most accurate procedural response. Why the other choices are wrong: Using the new market rate but keeping the old lock documentation unchanged creates a discrepancy and fails to disclose the actual locked terms. Moving the file to closing without resolving a known lock-expiration conflict ignores a material issue that could affect loan terms and fees. Assuming the borrower accepted lock changes because the payment is lower violates the requirement for proper disclosure and consumer consent. Exam tip: Any change to the locked rate or terms after the initial disclosure requires a new Loan Estimate within three business days.
Why This Is the Correct Answer
The correct response is "Send the revised Loan Estimate within three business days". A rate lock requiring revision carries a three business day redisclosure deadline.
Why the Other Options Are Wrong
Option B: Use the new market rate but keep the old lock documentation unchanged.
This choice is not the best answer because it applies the wrong file step for rate-lock documentation; the governing rule is tested by the correct option.
Option C: Move the file to closing without resolving a known lock-expiration conflict.
This choice is a tempting shortcut, but it conflicts with rate-lock documentation because the file still needs the required documentation, timing, or rule-based review before the action is taken.
Option D: Assume the borrower accepted lock changes because the payment is lower.
This choice is not the best answer because it applies the wrong file step for rate-lock documentation; the governing rule is tested by the correct option.
Memory Technique
Rate lock plus revised LE equals three business days.
Exam Tip
For rate-lock documentation questions, separate the required file step from plausible sales, timing, or documentation shortcuts.
Common Mistakes to Avoid
- -Borrower-requested rate locks can still require revised written disclosure.
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