If the Closing Disclosure has been provided to the applicant, what is the rule regarding the Loan Estimate?

When the Closing Disclosure has been provided to the applicant, it is important to understand the timeline and regulations surrounding the Loan Estimate under the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA).

The correct understanding is that the Loan Estimate may not be provided after the Closing Disclosure. This is because the Loan Estimate must be delivered within three business days of receiving a loan application, and it serves as an initial disclosure to inform borrowers about the costs and terms of the mortgage. Once the Closing Disclosure is issued, which is the final statement of the loan terms and costs, providing a Loan Estimate would not align with the regulatory intent. Essentially, the sequencing of these documents is designed to prevent confusion and ensure that the borrower fully understands the terms before closing.

In providing a Closing Disclosure, lenders are confirming the final terms of the mortgage, effectively making the Loan Estimate a document that is no longer applicable. This regulation helps clarify the borrower’s financial obligations and ensures they have the most accurate and pertinent information as they approach closing.

The other options presented do not align with the rules set forth by TILA and RESPA and could lead to misunderstandings in the closing process. Hence, the option that states the Loan Estimate may not be