Three business days before a scheduled California residential closing, the buyer's lender issues a Closing Disclosure showing that the loan's APR has increased beyond the TRID tolerance threshold compared to the original Loan Estimate. What must occur before closing can proceed?
Correct Answer
A) The lender must issue a corrected Closing Disclosure, and closing cannot occur until a new 3-business-day waiting period has elapsed from the buyer's receipt of the corrected disclosure
Under TRID rules in Regulation Z section 1026.19(f)(2), three changes require the lender to issue a corrected Closing Disclosure and give the consumer a new three-business-day review period before consummation: the disclosed APR becomes inaccurate, the loan product changes, or a prepayment penalty is added. An APR increase beyond the applicable tolerance is one of those triggers, so the lender must reissue the Closing Disclosure and the buyer must receive it at least three business days before closing. Other changes to the figures require a corrected disclosure at or before consummation but do not restart the waiting period.
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Related Concepts
Recording is the act of placing a document in the public records at the county recorder's office to give constructive notice to the world of an interest in real property. Recording protects the holder's interest against subsequent claims.
A special warranty deed guarantees that the grantor has not caused any title defects during their period of ownership, but does not warrant against defects that existed before the grantor acquired the property.
Title insurance is a policy that protects the insured party against financial loss from defects in title that were not discovered during the title search. Unlike other insurance, it covers past events rather than future risks.
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