The Condo That Changed Three Days Before Closing
Marisol is buying a $340,000 condo in Jersey City with 20% down, and closing is set for Friday, April 24. Her Loan Estimate was delivered in person on Tuesday, March 3, showing a $550 appraisal fee, a $2,720 origination fee (1% of the loan), and $1,850 in title and closing charges. On Tuesday, April 21, the appraiser reports the condo project is not on the approved list and must go through a full project review, adding $350 to the appraisal cost. That same afternoon Marisol decides to drop to 10% down so she can keep cash reserves. The loan amount rises from $272,000 to $306,000 and the origination fee rises by $680. Title confirms its $1,850 is unchanged. Marisol's lease ends May 1 and she refuses to delay. No Closing Disclosure has been delivered yet.
1. Which of the increased charges may be passed to Marisol, and under what disclosure rules?
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Start by sorting each fee into its good-faith tolerance bucket:
- $350 appraisal increase - 10% cumulative bucket. An appraisal/project-review fee sits in the 10% aggregate bucket. It may increase, and the increase is measured against the sum of all 10%-bucket charges, not fee by fee. 10% of $272,000 is $27,200, so this increase is comfortably covered.
- $680 origination increase - 0% bucket. The lender's own origination fee is a zero-tolerance charge, so it can move only with a valid changed circumstance. Here the trigger is legitimate: a borrower-requested change (the down payment decision) that affects settlement charges.
- $1,850 title/closing - unchanged, so no analysis needed.
Because the information was received April 21, the lender must act promptly: a revised Loan Estimate is generally due within three business days of receiving information sufficient to establish the changed circumstance, and normally must be delivered no later than four business days before consummation. With a Friday closing, the lender has run out of room for a revised LE, which pushes the analysis to the Closing Disclosure rules.
2. Can the lender skip a revised Loan Estimate and simply put the new numbers on the Closing Disclosure?
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Yes, but only because of the calendar. Under the TRID timing rules, a creditor normally must deliver a revised Loan Estimate within three business days of learning of a changed circumstance and no later than four business days before consummation. When the changed circumstance is received fewer than four business days before consummation, the creditor may deliver the revised disclosures as soon as reasonably practicable - and the practical consequence is that the changed charges are reflected on the Closing Disclosure rather than a revised LE.
Two limits keep this from being a free pass:
- The change must be a genuine changed circumstance - an extraordinary event, information the lender did not rely on, or a borrower-requested change. Marisol's decision to reduce her down payment qualifies; a lender's own pricing decision would not.
- Using the CD does not erase the good-faith standard. Any amount Marisol pays above the properly revised estimate must be refunded within 60 days after consummation, and a corrected CD issued.
The branch cannot treat the CD as a general-purpose substitute for a sloppy LE process; it is a narrow timing accommodation.
3. Marisol insists on closing Friday, April 24. May the lender close that day?
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Not on this record - even though the appraisal/origination increases could ride on the CD.
The reason is a separate trigger. Reducing the down payment from 20% to 10% raises the loan amount by $34,000, which will almost certainly change the annual percentage rate by more than the Reg Z accuracy tolerance (1/8 of 1 percentage point for a regular transaction). When the APR becomes inaccurate after the CD is delivered but before consummation, the creditor must deliver a corrected Closing Disclosure and restart the three-business-day waiting period. The late-change accommodation discussed above applies to settlement charges affected by a changed circumstance; it does not override the APR-accuracy rule.
Practical sequence the loan officer should follow:
- Redisclose with the corrected loan amount and APR.
- Wait three business days from delivery (receipt rules apply if mailed or e-delivered).
- Close the following week, and tell Marisol's agent immediately so the lease can be extended.
Telling the borrower 'we'll just close Friday and fix it after' would be a disclosure violation and would create an unenforceable, misstated CD.