Before closing, the team discovers that a valid changed circumstance raises a fee before the Closing Disclosure has been issued. What is the safest compliant answer?
Correct Answer
B) Issue a revised Loan Estimate within three business days
Why this is correct: Regulation Z (12 CFR 1026.19(e)(3)(iv) and (e)(4)(i)) provides that a valid changed circumstance allows a creditor to issue a revised Loan Estimate if it occurs before the Closing Disclosure is issued. The creditor must issue this revised Loan Estimate within three business days after obtaining sufficient information about the changed circumstance. Why the other choices are wrong: "Apply the correct general concept to the wrong refinance benefit stage rather than the Revised Loan Estimate changed circumstance rule" is wrong because it misapplies a correct concept to an irrelevant procedural stage; the rule specifically governs revised Loan Estimates pre-closing. "Treat a rate lock as a changed circumstance for unrelated settlement fees" is wrong because a rate lock does not qualify as a changed circumstance for fees not directly tied to the lock. "Ignore redisclosure timing because the borrower verbally accepted the new terms" is wrong because the three-business-day redisclosure requirement is a legal timing rule that cannot be waived by the borrower's verbal acceptance. Exam tip: Focus on the trigger (valid changed circumstance) and the required action (revised Loan Estimate within 3 business days). Don't get distracted by borrower actions or unrelated loan stages.
Why This Is the Correct Answer
The correct response is "Issue a revised Loan Estimate within three business days". A valid changed circumstance permits a revised Loan Estimate, but the timing window is still three business days after sufficient information is received.
Why the Other Options Are Wrong
Option A: Apply the correct general concept to the wrong refinance benefit stage rather than the Revised Loan Estimate changed circumstance rule.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Option C: Treat a rate lock as a changed circumstance for unrelated settlement fees.
This choice is not the best answer because it applies the wrong file step for changed-circumstance documentation; the governing rule is tested by the correct option.
Option D: Ignore redisclosure timing because the borrower verbally accepted the new terms.
This choice is a tempting shortcut, but it conflicts with changed-circumstance documentation because the file still needs the required documentation, timing, or rule-based review before the action is taken.
Memory Technique
Changed circumstance questions usually test both the reason and the timing.
Exam Tip
For changed-circumstance documentation questions, separate the required file step from plausible sales, timing, or documentation shortcuts.
Common Mistakes to Avoid
- -Do not assume every cost increase is barred; the issue is whether a valid changed circumstance supports redisclosure.
More Origination Questions
In a training scenario, the consumer locks the interest rate after the initial disclosure package. What action best follows the rule?
A mortgage file is paused during a risk-control review because of AIR Appraiser Independence. Which answer should explain the required action to the team?
A team member asks about Good Faith Dealing in a compliance desk review while trying to avoid a shortcut that would misapply the rule. Which response should the supervisor use?
A disclosure specialist is resolving Income Calculation Methods during an internal audit sample. Which action best fits the rule?
In a closing-readiness check, a quality-control reviewer sees facts tied to Self Employed Income Calculation. What should the file reflect?
During a disclosure desk review, a policy analyst encounters an Income Calculation Self Employed issue. Which response should decide how the file should be documented?
During a training quiz scenario, the loan team encounters an Income Calculation issue. Which response should resolve the issue before the file moves forward?
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?
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