In a training scenario, a late closing change occurs and the team must decide whether a new waiting period is required. What action best follows the rule?
Correct Answer
B) Restart the wait only for APR, product, or prepayment penalty changes
Why this is correct: The rule from 12 CFR 1026.19(f)(2)(ii) provides a clear, limited list of changes that force a creditor to provide a corrected Closing Disclosure and impose a new three-business-day waiting period. These are: an increase in the Annual Percentage Rate (APR), a change to the loan product (e.g., loan type), or the addition of a prepayment penalty. The action that best follows this rule is to evaluate the late change against this list and "Restart the wait only for APR, product, or prepayment penalty changes." Why the other choices are wrong: "Delay the Corrected Closing Disclosure new waiting period step until a later construction draw review instead of acting now" is wrong because if a triggering change occurs, the new waiting period must be provided for immediately before the closing can proceed; it cannot be delayed. "Cure a tolerance problem by renaming the fee instead of documenting or refunding the variance" is wrong because proper tolerance cures require the creditor to pay the excess amount, not disguise it. "Move the fee to a different category to avoid a tolerance cure" is wrong because fees belong in specific categories based on the service; moving them is an improper attempt to circumvent tolerance rules. Exam tip: The three triggers for a new wait are mandatory knowledge. For any other change, you proceed to closing without a new three-day delay.
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: Delay the Corrected Closing Disclosure new waiting period step until a later construction draw review instead of acting now.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
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.
Option D: Move the fee to a different category to avoid a tolerance cure.
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
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?
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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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