After delivery of the Closing Disclosure, the loan product changes from a fixed-rate mortgage to an adjustable-rate mortgage. What is required before consummation?
Correct Answer
B) A corrected Closing Disclosure and a new three-business-day waiting period
Why this is correct: Under TRID, if a key loan term becomes inaccurate after the Closing Disclosure is provided, a corrected Closing Disclosure must be issued. Changing from a fixed-rate to an adjustable-rate mortgage is a fundamental change to the loan product. This triggers a new three-business-day waiting period before consummation can occur, giving the consumer time to review the significant change. Why the other choices are wrong: The choice "Only an internal file note" is wrong because a material change requires a formal corrected disclosure to the consumer, not just internal documentation. The choice "No correction if the initial payment is lower" is wrong because the rule is based on the accuracy of disclosed terms, not on whether a change is superficially favorable. A lower payment does not waive the disclosure and waiting period requirement. The choice "A revised Loan Estimate after consummation" is wrong because the Loan Estimate is a pre-consummation form; issuing it after closing would be untimely and non-compliant for this post-Closing Disclosure change. Exam tip: Any change that makes the loan product disclosed on the Closing Disclosure inaccurate requires a new corrected Closing Disclosure and resets the three-day clock. This is a critical pre-consummation step.
Why This Is the Correct Answer
Why this is correct: Under TRID, if a key loan term becomes inaccurate after the Closing Disclosure is provided, a corrected Closing Disclosure must be issued. Changing from a fixed-rate to an adjustable-rate mortgage is a fundamental change to the loan product. This triggers a new three-business-day waiting period before consummation can occur, giving the consumer time to review the significant change. Why the other choices are wrong: The choice "Only an internal file note" is wrong because a material change requires a formal corrected disclosure to the consumer, not just internal documentation. The choice "No correction if the initial payment is lower" is wrong because the rule is based on the accuracy of disclosed terms, not on whether a change is superficially favorable. A lower payment does not waive the disclosure and waiting period requirement. The choice "A revised Loan Estimate after consummation" is wrong because the Loan Estimate is a pre-consummation form; issuing it after closing would be untimely and non-compliant for this post-Closing Disclosure change. Exam tip: Any change that makes the loan product disclosed on the Closing Disclosure inaccurate requires a new corrected Closing Disclosure and resets the three-day clock. This is a critical pre-consummation step.
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