If a loan's terms are altered after the initial disclosures, what is the creditor's obligation?

The correct response is that the creditor is obligated to provide revised disclosures before disbursement when the loan's terms are altered after the initial disclosures. This requirement stems from the Truth in Lending Act (TILA) under Regulation Z, which mandates that consumers receive accurate and timely information regarding the loan terms to help them make informed decisions.

When any key terms of the loan change - such as the interest rate, payment amount, or loan term - the creditor must issue revised disclosures that reflect these changes. This ensures that the borrower is fully aware of any modifications that could affect their financial obligations and overall borrowing experience. Providing this updated information helps maintain transparency and protects borrowers from being blindsided by changes that could significantly impact their repayment plan.

This obligation is crucial not only for compliance with regulations but also for fostering trust and promoting responsible lending practices. By ensuring borrowers have all relevant information, creditors can support sound financial decision-making and help prevent potential issues arising from misunderstanding loan terms.