Before the team acts on a supervisory file review, a risk reviewer must address Rate Lock Extensions. Which response is most defensible?
Correct Answer
A) Provide the revised Loan Estimate within three business days of lock
Why this is correct: Under TRID, a rate lock is a "changed circumstance" that can trigger a revised Loan Estimate if it occurs after the initial LE is provided. The rule requires the lender to provide the revised Loan Estimate within three business days of learning of the changed circumstance (the lock). This ensures the borrower receives updated, accurate disclosures based on the locked rate. Why the other choices are wrong: "Use the new market rate but keep the old lock documentation unchanged" is wrong because documentation must accurately reflect the locked rate and terms; using an outdated rate is misleading and non-compliant. "Move the file to closing without resolving a known lock-expiration conflict" is wrong because an expired lock creates significant risk; the terms may no longer be available, requiring redisclosure and potentially a new lock agreement. "Assume the borrower accepted lock changes because the payment is lower" is wrong because changes to the locked rate or terms require proper disclosure and borrower agreement; assumptions are not valid. Exam tip: A rate lock is a classic "changed circumstance" under Reg Z. Remember the timing: revised Loan Estimate within 3 business days of the event (locking the rate).
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 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 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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A borrower is told the rate is "locked" when the lock request has been submitted but not confirmed. The lock later fails and the rate moves. What standard did the conversation fall short of?
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