What to Do When a Clerical Error is Found on a Closing Disclosure

What must an MLO do when a clerical numerical error occurs on the Closing Disclosure?

• A. Make redisclosure.
• B. Deliver a revised Closing Disclosure and apply a new waiting period.
• C. Inform the borrower verbally.
• D. File a complaint with the state.

Answer: (B)

When a clerical numerical error occurs on the Closing Disclosure, the mortgage loan originator (MLO) is required to deliver a revised Closing Disclosure, which may necessitate a new waiting period. This is because the Closing Disclosure must accurately reflect the final terms of the loan and any changes made necessitate that the borrower is given proper notice and time to review the corrected information. A clerical error, even though it may not significantly alter the terms or costs of the loan, still requires a revised document because it could potentially lead to misunderstandings about the loan's terms. The revised disclosure needs to be provided to the borrower, ensuring they have all the needed information before closing the loan. This practice is intended to protect consumers and maintain transparency throughout the lending process. Applying a new waiting period allows the borrower adequate time to review the changes to the disclosure, reinforcing the commitment to fair lending practices and compliance with regulatory requirements.

When it comes to mortgage lending, accuracy is the name of the game. You know what? Even the smallest clerical numerical error can create significant implications, especially on documents like the Closing Disclosure. So, what should a mortgage loan originator (MLO) do if they stumble upon such an error during the process?

First things first, let’s talk about what the Closing Disclosure is all about. This document is crucial—it lays out the final terms and costs of your loan. It’s kind of like your instruction manual for the mortgage journey! If there’s a mistake, it can lead to confusion down the line, and that’s something no one wants, right? Mistakes happen, sure, but knowing how to rectify them is key to maintaining professionalism and compliance.

Step One: Get Ready to Revise

So, what’s the first move? Well, the answer is clear: the MLO must deliver a revised Closing Disclosure. Yes, that’s right. Simply acknowledging the error isn’t enough. A new version has to be presented to ensure the borrower has accurate and updated information. Think of it as refreshing your coffee; no one wants a stale cup when bidding farewell to their old financial commitments!

This revised document must also trigger a new waiting period. Why? Because it’s all about giving the borrower ample time to review the updated information before sealing the deal. It’s like preparing for a big exam—you don’t want to rush through the material or you might miss something critical.

Step Two: The Importance of Accuracy

This might seem like a hassle, but let’s dig a little deeper. Even minor clerical errors can lead to misunderstandings regarding the loan’s terms. Imagine you’re ready to sign on that dotted line, but the numbers don’t jive as expected. That would be a major headache. Transparency is key in the lending world, so ensuring that borrowers have the correct data at all times isn’t just good practice; it’s a necessity.

Step Three: Consumer Protection

You might wonder why the stakes are so high. After all, what’s the big deal with a number here and there? Well, the whole purpose of these regulations is consumer protection. When the MLO provides accurate disclosures and deadlines, they help to uphold trust and integrity in the lending process. Everybody benefits when everything is above board.

Closing the Deal

At the end of the day, when a clerical error crops up, it's not just a bureaucratic hurdle; it's an opportunity for the MLO to demonstrate diligence and a commitment to fair lending practices. By ensuring that the revised Closing Disclosure is issued along with a new waiting period, the MLO reinforces their role as a trusted guide through the complex mortgage maze.

So, the next time you encounter a clerical error on the Closing Disclosure, remember that proper action can make all the difference. A revised disclosure? Absolutely. A new waiting period? Without a doubt. Your role isn’t just about crunching numbers; it’s about building lasting relationships based on trust and transparency.