A processor compares the file facts with Loan Product Comparison Requirements during a licensing team review. Which conclusion is accurate?
Correct Answer
D) Provide the revised Loan Estimate within three business days of lock
Why this is correct: A rate lock is a changed circumstance that can affect the loan's terms and costs. Regulation Z requires that if a revised Loan Estimate is provided due to a rate lock, it must be delivered to the borrower within three business days of the lock date. This ensures the borrower receives updated, binding estimates promptly. Why the other choices are wrong: "Assume the borrower accepted lock changes because the payment is lower" is wrong because acceptance of any change must be explicit and documented; a lower payment does not imply consent. "Change locked terms without documenting the lock agreement and borrower authorization" is wrong because any modification to locked terms requires a formal agreement and documented borrower authorization. "Treat a float-down as automatic when the lock agreement does not provide it" is wrong because a float-down feature is a specific contractual right; it cannot be assumed if not included in the written lock agreement. Exam tip: The three-business-day deadline for providing a revised Loan Estimate after a lock is a key timing rule to memorize.
Why This Is the Correct Answer
The correct response is "Provide the revised Loan Estimate within three business days of lock" because Rate locks can require revised Loan Estimates and accurate interest-rate-dependent disclosures.
Why the Other Options Are Wrong
Option A: 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.
Option B: Change locked terms without documenting the lock agreement and borrower authorization.
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: Treat a float-down as automatic when the lock agreement does not provide it.
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 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
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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