An MLO sponsorship update raises a question about changed-circumstance review. Which action should the audit analyst recommend?
Correct Answer
B) Issue a revised Loan Estimate within three business days when valid
Why this is correct: Under Regulation Z (TILA-RESPA Integrated Disclosure rule), a valid changed circumstance (e.g., a change in sponsorship affecting loan costs) allows the lender to issue a revised Loan Estimate, provided it is delivered to the consumer within three business days of receiving information sufficient to establish the change. The original explanation correctly identifies this timing requirement. Why the other choices are wrong: "Redisclose only after consummation because the file already has a Closing Disclosure" is wrong because if a valid changed circumstance occurs before consummation, a revised Loan Estimate (and potentially a revised Closing Disclosure) may be required; waiting until after closing would violate timing rules. "Use a revised disclosure to reset tolerances without a documented event" is wrong because Regulation Z explicitly prohibits using revised disclosures to reset tolerance categories unless a valid changed circumstance, borrower-requested change, or other defined event has occurred and is documented. "Assume the TILA Loan Estimate Revisions condition is met because the borrower satisfied the separate secondary-market delivery requirement" is wrong because TRID's changed-circumstance rules are independent of secondary-market delivery requirements; satisfying one does not automatically satisfy the other. Exam tip: For changed circumstances, the clock is three business days. Know the valid reasons for revision and that they must be documented; you cannot revise just to reset tolerances.
Why This Is the Correct Answer
The correct response is "Issue a revised Loan Estimate within three business days when valid" because Changed circumstances can permit revised estimates only when Regulation Z conditions and timing are met.
Why the Other Options Are Wrong
Option A: Redisclose only after consummation because the file already has a Closing Disclosure.
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 C: Use a revised disclosure to reset tolerances without a documented event.
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: Assume the TILA Loan Estimate Revisions condition is met because the borrower satisfied the separate secondary-market delivery requirement.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
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
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