In a training scenario, a closing is approaching and the borrower has not yet received the Closing Disclosure. What action best follows the rule?
Correct Answer
D) Ensure receipt three business days before consummation
Why this is correct: The rule under TILA-RESPA Integrated Disclosure (TRID) is that the consumer must receive the Closing Disclosure no later than three business days before consummation (loan closing). This waiting period, mandated by 12 CFR 1026.19(f)(1)(ii), allows the borrower time to review the final terms. Therefore, the action that best follows the rule is to ensure receipt three business days before consummation. Why the other choices are wrong: "Treat a changed provider fee as unlimited solely because it is paid to a third party" is wrong because while some third-party fees have different tolerance rules, a change does not make them automatically unlimited; specific conditions must be met. "Leave the Loan Estimate unchanged after the creditor learns the disclosed charge is inaccurate" is wrong because if a charge becomes inaccurate before the Closing Disclosure is issued, a revised Loan Estimate may be required; leaving it unchanged could violate good faith estimate rules. "Cure a tolerance problem by renaming the fee instead of documenting or refunding the variance" is wrong because renaming a fee to avoid a tolerance cure is deceptive and does not satisfy the requirement to document a valid reason for the increase or to refund the excess to the borrower. Exam tip: The three-business-day rule for the Closing Disclosure is a hard deadline. 'Receipt' is key—sending it is not enough.
Why This Is the Correct Answer
The correct response is "Ensure receipt three business days before consummation" because Lines 205-206; 12 CFR 1026.19(f)(1)(ii).
Why the Other Options Are Wrong
Option A: Treat a changed provider fee as unlimited solely because it is paid to a third party.
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: Leave the Loan Estimate unchanged after the creditor learns the disclosed charge is inaccurate.
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 C: Cure a tolerance problem by renaming the fee instead of documenting or refunding the variance.
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.
Memory Technique
Closing Disclosure timing: identify the rule being tested, then choose the action that documents or applies that rule before the file moves forward.
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
- -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
More Origination Questions
Before the team acts on a servicing handoff check, a closing coordinator must address Asset Verification and Reserves. Which response is most defensible?
An MLO is reviewing procedures for a case where a cost changes after the Closing Disclosure has already been provided. What is the proper handling?
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?
A construction-to-permanent loan will disburse in 5 draws over 11 months before the permanent phase begins. Which Regulation Z appendix provides a disclosure method for multiple-advance construction transactions?
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?
A construction loan agreement allows advances only after documented completion of specified work. A builder requests the next draw, but no completion evidence has been provided. What should occur?
Before releasing the final construction draw, which combination most directly supports project completion and clear collateral?
A construction-to-permanent loan will convert to a substantially higher fully amortizing payment. Which payment is especially important when assessing the borrower's long-term repayment capacity?
A construction-to-permanent note states that conversion requires completion, a certificate of occupancy, and no unresolved liens. Construction is finished, but a mechanic's lien remains. What should happen?
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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