During a borrower intake review, the branch manager encounters a Loan Product Comparison issue. Which response should resolve the issue before the file moves forward?
Correct Answer
A) Use a corrected Closing Disclosure if the lock occurs after the CD
Why this is correct: The Closing Disclosure (CD) must reflect the final, accurate loan terms. If an interest rate lock occurs after the initial CD has been issued, the locked terms (like the interest rate and associated points or credits) will likely differ from what was disclosed. In this scenario, TRID rules require the creditor to issue a corrected Closing Disclosure to reflect the accurate locked terms. The correct choice, "Use a corrected Closing Disclosure if the lock occurs after the CD," addresses this specific timing conflict. The original explanation correctly notes that rate locks require accurate interest-rate-dependent disclosures. Why the other choices are wrong: "Move the file to closing without resolving a known lock-expiration conflict" is wrong because proceeding to closing with known, unresolved discrepancies in loan terms is non-compliant and risky. "Assume the borrower accepted lock changes because the payment is lower" is wrong because verbal or implied acceptance does not replace the mandatory written disclosure of corrected terms. "Delay the Loan Product Comparison step until a later advertising disclosure review instead of acting now" is wrong because product comparison is a required step in the origination process to ensure the borrower receives a suitable loan; delaying it does not resolve the immediate disclosure issue caused by the post-CD lock. Exam tip: If a key event (like a rate lock) happens after the Closing Disclosure is issued, think 'corrected CD.' This ensures the borrower receives the final terms at least three business days before closing.
Why This Is the Correct Answer
The correct response is "Use a corrected Closing Disclosure if the lock occurs after the CD" because Rate locks can require revised Loan Estimates and accurate interest-rate-dependent disclosures.
Why the Other Options Are Wrong
Option B: Move the file to closing without resolving a known lock-expiration conflict.
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: Assume the borrower accepted lock changes because the payment is lower.
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 D: Delay the Loan Product Comparison step until a later advertising disclosure 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.
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
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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