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 (Regulation Z §1026.19(f)(2)), three specific changes require the lender to issue a corrected Closing Disclosure and restart the 3-business-day waiting period: an APR increase beyond the applicable tolerance, a change in loan product, or the addition of a prepayment penalty. An APR increase beyond tolerance is one of these triggering events, so the lender must issue a corrected CD and the buyer must receive it at least 3 business days before closing can occur.
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