During intake, the consumer locks the interest rate after the initial disclosure package. What is the best compliant response?
Correct Answer
C) Send the revised Loan Estimate within three business days
Why this is correct: Under TILA-RESPA Integrated Disclosure (TRID) rules, specifically 12 CFR 1026.19(e)(3)(iv)(D), if a rate lock (an interest rate agreement) occurs after the initial Loan Estimate is provided and it changes previously disclosed terms, a revised Loan Estimate must be sent to the consumer within three business days. The original explanation cites this deadline. Therefore, "Send the revised Loan Estimate within three business days" is the compliant action. Why the other choices are wrong: "Change locked terms without documenting the lock agreement and borrower authorization" is incorrect because any change to locked terms requires proper documentation and borrower consent. "Treat a float-down as automatic when the lock agreement does not provide it" is wrong because float-down features must be explicitly included in the lock agreement; they are not automatic. "Ignore the lock expiration because underwriting delay was internal" is prohibited because lock expiration must be managed regardless of the reason for delay; internal delays do not excuse compliance. Exam tip: Rate lock after initial disclosure? Revised Loan Estimate due in 3 business days. Memorize this trigger and deadline.
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: 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 B: 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.
Option D: Ignore the lock expiration because underwriting delay was internal.
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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