A quality-control reviewer flags a case because a closing is approaching and the borrower has not yet received the Closing Disclosure. What correction is appropriate?
Correct Answer
B) Ensure receipt three business days before consummation
Why this is correct: The governing concept is the TILA-RESPA Integrated Disclosure (TRID) rule, specifically the timing requirement for the Closing Disclosure. Under 12 CFR 1026.19(f)(1)(ii), the creditor must ensure the borrower receives the Closing Disclosure no later than three business days before consummation (loan closing). This waiting period is mandatory to give the borrower time to review the final terms and costs. The correct action is to "Ensure receipt three business days before consummation." Why the other choices are wrong: "Increase a zero-tolerance charge because the borrower accepted the cost verbally" is wrong because zero-tolerance charges (like the lender's origination fee) cannot increase at all, regardless of borrower verbal acceptance. "Wait until closing to disclose a known lender-required fee" is wrong because all fees must be disclosed in advance on the Closing Disclosure, not at the closing table. "Use the lowest advertised provider quote after a different provider has been selected" is wrong because the creditor must use the actual provider's charges for the Closing Disclosure, not an outdated or advertised quote. Exam tip: Remember the "three business day" rule for the Closing Disclosure is a hard deadline before closing. It applies to receipt, not just mailing.
Why This Is the Correct Answer
The correct response is "Ensure receipt three business days before consummation". The Closing Disclosure is a pre-consummation disclosure, so receipt must occur at least three business days before consummation.
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 C: 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
Closing Disclosure means three business days before consummation.
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
- -Closing Disclosure timing is not satisfied by same-day delivery at settlement.
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?
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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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