The loan team is resolving TILA Loan Estimate Tolerances during a loan setup review. Which action best fits the rule?
Correct Answer
B) Disclose settlement charges within TRID timing rules
Why this is correct: The governing TRID rule requires that Loan Estimates and Closing Disclosures be provided to consumers within specific, mandatory timeframes. The correct action, "Disclose settlement charges within TRID timing rules," applies this concept by ensuring all fees are disclosed to the borrower at the legally required times, not when it is merely convenient. Why the other choices are wrong: "Wait until closing to disclose a known lender-required fee" is wrong because known fees must be disclosed in the initial Loan Estimate; delaying violates timing rules. "Use the lowest advertised provider quote after a different provider has been selected" is wrong because the estimate must be based on the provider the consumer is likely to use, not a misleading lower quote. "Treat a changed provider fee as unlimited solely because it is paid to a third party" is wrong; while some third-party fees fall into "unlimited tolerance" categories, this is not automatic; the fee must be correctly categorized based on specific TRID criteria. Exam tip: TRID is about timing and accuracy. The first correct step is always to disclose on time.
Why This Is the Correct Answer
The correct response is "Disclose settlement charges within TRID timing rules" because TRID fee disclosures and tolerance categories govern estimates, revisions, and closing-cost comparison.
Why the Other Options Are Wrong
Option A: 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 C: 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.
Option D: Treat a changed provider fee as unlimited solely because it is paid to a third party.
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.
Memory Technique
TILA Loan Estimate Tolerances: identify the rule being tested, then choose the action that documents or applies that rule before the file moves forward.
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
- -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?
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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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