What must be done if there is a change of circumstances after the Loan Estimate has been issued?

When there is a change of circumstances after the Loan Estimate has been issued, it is necessary to issue a new Loan Estimate. This requirement ensures that all parties involved have the most accurate and up-to-date information regarding the terms of the loan. Changes in circumstances could include variations in the borrower’s credit score, changes in the property value, or adjustments in loan terms, among other factors.

By providing a new Loan Estimate, the lender keeps the borrower informed about how these changes impact the overall loan structure, including interest rates and costs. This practice aligns with the transparency and disclosure standards mandated by the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA), ensuring borrowers can make well-informed decisions.

The other options do not fulfill the legal requirement set forth in these regulations, as revising the Closing Disclosure or merely notifying the borrower without issuing a new Loan Estimate would not provide a complete or legally compliant update on the loan terms. Changing loan terms without informing the borrower is not permissible and goes against the principles of ethical lending.