In a training scenario, the consumer locks the interest rate after the initial disclosure package. What action best follows the rule?
Correct Answer
B) Send the revised Loan Estimate within three business days
Why this is correct: Under Regulation Z (12 CFR 1026.19(e)(3)(iv)(D)), when a consumer locks an interest rate after receiving the initial Loan Estimate, the creditor must provide a revised Loan Estimate within three business days of the rate lock. This is required to reflect the locked rate and any associated terms. Why the other choices are wrong: "Charge a lock-extension fee without confirming who caused the delay and what was disclosed" is wrong because charging such a fee may be improper if the delay was caused by the lender. "Use the new market rate but keep the old lock documentation unchanged" is wrong because it creates inaccurate and non-compliant records. "Move the file to closing without resolving a known lock-expiration conflict" is wrong because it risks closing with incorrect or expired terms. Exam tip: A post-initial-LE rate lock triggers a revised Loan Estimate deadline of three business days.
Why This Is the Correct Answer
The correct response is "Send the revised Loan Estimate within three business days" because Lines 198-203; 12 CFR 1026.19(e)(3)(iv)(D).
Why the Other Options Are Wrong
Option A: Charge a lock-extension fee without confirming who caused the delay and what was disclosed.
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 C: 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 D: 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.
Memory Technique
rate-lock agreements: identify the rule being tested, then choose the action that documents or applies that rule before the file moves forward.
Exam Tip
For rate-lock documentation 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
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