A lender issued a Loan Estimate based on a 75% loan-to-value ratio. After the appraisal comes in much lower than expected, the loan now requires mortgage insurance and higher closing costs. What is the creditor generally allowed to do?
Correct Answer
A) Issue a revised Loan Estimate within three business days of learning the changed circumstance
A lower-than-expected appraisal can be a changed circumstance because it affects the value of the security and the consumer's eligibility for previously estimated charges. That allows the creditor to issue a revised Loan Estimate, and the rule generally requires the revision within three business days after learning of the event.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The secondary mortgage market is where existing mortgage loans are bought and sold between lenders, investors, and government-sponsored enterprises (GSEs) like Fannie Mae, Freddie Mac, and Ginnie Mae.
TILA is a federal law that requires lenders to disclose the true cost of credit to borrowers, including the annual percentage rate (APR), total finance charges, and loan terms. It is implemented by Regulation Z.
A trustee sale is a type of foreclosure where a trustee, appointed under a deed of trust, sells the property at auction to satisfy the debt.
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