What must a lender do if there’s a valid change of circumstances affecting the estimated loan terms?

When there is a valid change of circumstances affecting the estimated loan terms, the lender is required to revise the Loan Estimate. This is essential because the Loan Estimate must reflect the most accurate and up-to-date information regarding the terms of the mortgage loan based on the current circumstances.

Changes in circumstances could include various factors such as a change in the borrower's credit profile, the appraised value of the property, or fluctuations in interest rates. By revising the Loan Estimate, the lender ensures that the borrower has the right information to make informed decisions, promoting transparency and compliance with regulatory requirements.

This action also begins a new three-business-day period within which the borrower must receive the updated Loan Estimate, allowing them to review the new terms and conditions before moving forward in the loan process.