During intake, a late closing change occurs and the team must decide whether a new waiting period is required. What is the best compliant response?
Correct Answer
C) Restart the wait only for APR, product, or prepayment penalty changes
Why this is correct: The rule for when a new three-business-day waiting period is required after a Closing Disclosure is issued is narrow. Under 12 CFR 1026.19(f)(2)(ii), a corrected Closing Disclosure and a new waiting period are triggered only by specific, last-minute changes: an increase in the Annual Percentage Rate (APR) beyond a permitted variance, a change in the loan product (e.g., from fixed-rate to adjustable-rate), or the addition of a prepayment penalty. Therefore, the compliant response is to "Restart the wait only for APR, product, or prepayment penalty changes." Why the other choices are wrong: "Increase a zero-tolerance charge because the borrower accepted the cost verbally" is wrong because zero-tolerance fees cannot increase for any reason, and verbal acceptance is not valid. "Wait until closing to disclose a known lender-required fee" is wrong because known fees must be disclosed on the initial Closing Disclosure, not delayed. "Use the lowest advertised provider quote after a different provider has been selected" is wrong because the actual selected provider's charge must be used, ensuring accurate disclosure. Exam tip: For a new waiting period, think "APP": APR, Product, Prepayment penalty. Other changes before closing do not require a new three-day wait.
Why This Is the Correct Answer
The correct response is "Restart the wait only for APR, product, or prepayment penalty changes". Only the specified APR, product, or prepayment penalty changes trigger the new three business day waiting period.
Why the Other Options Are Wrong
Option A: Increase a zero-tolerance charge because the borrower accepted the cost verbally.
This choice is a tempting shortcut, but it conflicts with fee disclosure and tolerance treatment because the file still needs the required documentation, timing, or rule-based review before the action is taken.
Option B: Wait until closing to disclose a known lender-required fee.
This choice is not the best answer because it applies the wrong file step for fee disclosure and tolerance treatment; the governing rule is tested by the correct option.
Option D: Use the lowest advertised provider quote after a different provider has been selected.
This choice is not the best answer because it applies the wrong file step for fee disclosure and tolerance treatment; the governing rule is tested by the correct option.
Memory Technique
Memorize the three restart triggers: APR, product, prepayment penalty.
Exam Tip
For fee disclosure and tolerance treatment questions, separate the required file step from plausible sales, timing, or documentation shortcuts.
Common Mistakes to Avoid
- -Not every corrected Closing Disclosure creates a fresh waiting period.
More Origination Questions
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During a post-application update, a quality-control reviewer encounters a Credit Analysis and Evaluation issue. Which response should avoid a shortcut that would misapply the rule?
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Before closing, the team discovers that a borrower asks which upfront charge can be collected before intent to proceed. What is the safest compliant answer?
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Before releasing the final construction draw, which combination most directly supports project completion and clear collateral?
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A branch manager asks about a loan file because a processor wants to omit known monthly obligations from underwriting. What should happen?
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