The creditor corrects a misspelled street name on the Closing Disclosure, with no effect on APR, loan product, or prepayment penalty. Must the correction restart the three-business-day waiting period?
Correct Answer
D) No; this correction does not fall within the three changes that generally restart the period
Why this is correct: The three-business-day waiting period before consummation is restarted only for specific, significant changes to the Closing Disclosure. The key restart triggers are an inaccurate Annual Percentage Rate (APR), a change in the loan product, or the addition of a prepayment penalty. A simple clerical correction, like fixing a misspelled street name with no impact on the APR, loan product, or prepayment penalty, does not require a new waiting period. Why the other choices are wrong: The choice "Yes, every corrected character restarts it" is wrong because not every minor correction triggers a restart. The choice "No correction may be issued before consummation" is wrong; clerical errors can and should be corrected. The choice "Yes, unless the appraisal is waived" is wrong because an appraisal waiver is irrelevant to the rules for correcting a Closing Disclosure and restarting the waiting period. Exam tip: Memorize the three key changes that restart the waiting period: APR inaccuracy, loan product change, or added prepayment penalty. Minor clerical fixes do not.
Why This Is the Correct Answer
Why this is correct: The three-business-day waiting period before consummation is restarted only for specific, significant changes to the Closing Disclosure. The key restart triggers are an inaccurate Annual Percentage Rate (APR), a change in the loan product, or the addition of a prepayment penalty. A simple clerical correction, like fixing a misspelled street name with no impact on the APR, loan product, or prepayment penalty, does not require a new waiting period. Why the other choices are wrong: The choice "Yes, every corrected character restarts it" is wrong because not every minor correction triggers a restart. The choice "No correction may be issued before consummation" is wrong; clerical errors can and should be corrected. The choice "Yes, unless the appraisal is waived" is wrong because an appraisal waiver is irrelevant to the rules for correcting a Closing Disclosure and restarting the waiting period. Exam tip: Memorize the three key changes that restart the waiting period: APR inaccuracy, loan product change, or added prepayment penalty. Minor clerical fixes do not.
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?
People Also Study
Federal Mortgage-Related Laws
24% of exam
General Mortgage Knowledge
20% of exam
Ethics, Fraud & Consumer Protection
18% of exam
Uniform State Test Content
11% of exam