A processor asks how to handle a file where a cost changes after the Closing Disclosure has already been provided. Which response is most accurate?
Correct Answer
A) Use a corrected Closing Disclosure instead of a revised Loan Estimate
Why this is correct: The rule under Regulation Z is clear: after the Closing Disclosure is provided, any changes in costs must be handled via a corrected Closing Disclosure, not a revised Loan Estimate. This is per 12 CFR 1026.19(e)(4)(ii) and 1026.19(f)(2). Why the other choices are wrong: "Treat a rate lock as a changed circumstance for unrelated settlement fees" is wrong because a rate lock is not a valid changed circumstance for increasing fees that are unrelated to the rate lock itself. "Ignore redisclosure timing because the borrower verbally accepted the new terms" is wrong because verbal acceptance does not waive the mandatory written disclosure requirements under TILA-RESPA rules. "Increase disclosed costs based on an internal pricing preference without file-specific support" is wrong because cost increases must be based on a valid changed circumstance specific to the borrower's transaction, not internal preferences. Exam tip: Remember, corrected Closing Disclosure is the only compliant tool for post-Closing Disclosure changes.
Why This Is the Correct Answer
The correct response is "Use a corrected Closing Disclosure instead of a revised Loan Estimate" because Lines 198-206; 12 CFR 1026.19(e)(4)(ii) and 1026.19(f)(2).
Why the Other Options Are Wrong
Option B: 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.
Option C: Ignore redisclosure timing because the borrower verbally accepted the new terms.
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: Increase disclosed costs based on an internal pricing preference without file-specific support.
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.
Memory Technique
changed-circumstance review: identify the rule being tested, then choose the action that documents or applies that rule before the file moves forward.
Exam Tip
For changed-circumstance 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
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