What must a lender do if there are discrepancies in the Loan Estimate compared to the Closing Disclosure?

When there are discrepancies between the Loan Estimate and the Closing Disclosure, the lender is obligated to correct these discrepancies and provide notice to the borrower. This requirement is part of the regulatory framework established to ensure transparency and fairness in the mortgage lending process. The Loan Estimate is provided to give borrowers an upfront summary of the loan terms, projected payments, and estimated closing costs, while the Closing Disclosure must accurately reflect the final terms of the loan and costs involved.

Failure to correct discrepancies can lead to confusion for the borrower and could violate regulations aimed at protecting consumers. By promptly addressing any inconsistencies, the lender fosters trust and ensures that the borrower is well-informed about their loan, which is essential for an effective lending process.

In contrast, ignoring the discrepancies or delaying communication could lead to regulatory issues and dissatisfaction from the borrower. Asking the borrower to resolve the issues themselves does not place the responsibility where it lies, which is on the lender to provide accurate information throughout the loan process. Thus, promptly correcting any discrepancies and notifying the borrower aligns with best practices and regulatory compliance.