In a closing-readiness check, an audit analyst sees facts tied to Rate Lock Agreements. What should the file reflect?
Correct Answer
D) Provide the revised Loan Estimate within three business days of lock
Why this is correct: Under TILA-RESPA Integrated Disclosure (TRID) rules, a rate lock that changes the interest rate is a triggering event that requires a revised Loan Estimate if it occurs after the initial estimate is provided. The rule specifies that the revised Loan Estimate must be provided to the consumer within three business days after the rate is locked. Why the other choices are wrong: "Treat a float-down as automatic when the lock agreement does not provide it" is incorrect because a float-down is a specific feature that must be contractually agreed upon; it cannot be assumed. "Ignore the lock expiration because underwriting delay was internal" is wrong because lock expiration terms are binding, and internal delays do not absolve the lender from the agreed-upon terms or potential extension fee requirements. "Charge a lock-extension fee without confirming who caused the delay and what was disclosed" violates good faith and disclosure rules; the cause of delay and proper fee disclosure must be verified. Exam tip: A rate lock is a major event. Always remember the three-business-day clock for issuing a revised Loan Estimate after locking.
Why This Is the Correct Answer
The correct response is "Provide the revised Loan Estimate within three business days of lock" because Rate locks can require revised Loan Estimates and accurate interest-rate-dependent disclosures.
Why the Other Options Are Wrong
Option A: 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 B: 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.
Option C: Charge a lock-extension fee without confirming who caused the delay and what was disclosed.
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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