On a recent ABA working group call the presenter discussed reseting fees used in your tolerance calculation using the initial or revised Closing Disclosure. The caveat being there have to be less than 4 business days between the deadline to provide a revised Closing Disclsoure and your closing date.

Wondering if other institutions are going to utilize this option to reset your tolerance baseline.

This has been discussed in great detail via a prior thread:

http://www.bankersonline.com/forum/ubbth...910#Post2012910

And here's the latest written response we rec'd from the CFPB (7/21/15):

Our Question:

Assuming a Closing Disclosure is provided no earlier than required, can a creditor reset tolerances if a valid changed circumstance occurs after the Closing Disclosure has been delivered?

We feel references from both the Small Entity Guide and Webinars support this (below), but would appreciate clarification:

What if a changed circumstance occurs within four business days of consummation? (Comment 19(e)(4)(ii)-1)

If the event occurs after the first Closing Disclosure has been provided to the consumer (i.e., within the three-business-day waiting period before consummation), the creditor may use revised charges on the Closing Disclosure provided to the consumer at consummation, and compare those amounts to the amounts charged for purposes of determining good faith and tolerance. (Comment 19(e)(4)(ii)-1)

From the 8/26/14 Outlook Webinar:

The Rule does recognize that changed circumstances or other events may occur at times where the creditor receives information sufficient to establish a ground for redisclosure at a point in time that is too late to provide a revised Loan Estimate within these restrictions. The Bureau, in crafting the Final Rule, acknowledged this possibility and provided some flexibility to creditors through comment §1026.19(e)(4)(ii)-1 in the event that there are less than four business days between the time the revised version of the Loan Estimate would be required to be provided under §1026.19(e)(4)(i) and consummation. In this limited circumstance, comment § 1026.19(e)(4)(ii)-1 allows creditors to comply with the timing requirements of § 1026.19(e)(4), in other words to redisclose, if the revised disclosures are reflected on the Closing Disclosure, or as the Rule says, the disclosures required by § 1026.19(f)(1)(i).

Therefore, in circumstances where there are less than four business days in between the time the revised disclosures would be required to be provided, that’s again generally going to be within three business days of receiving information sufficient to establish, then the Closing Disclosure may be used to redisclose any estimates that increase due to a triggering event and some examples are laid out in the commentary.

In tying back to the initial question, the question that Dania teed up, the Rule does not provide any other means for a Closing Disclosure to be used to redisclose and reset applicable tolerance levels in other circumstances, including when the Closing Disclosure is provided earlier than is required to under the rules unless, somehow, that event would fit within this window as described in that comment.

CFPB Answer:

In regard to your second question on changed circumstances within the three-business-day waiting period before consummation, please refer to comment 19(e)(4)(ii)-1 of the TILA-RESPA Integrated Disclosure rule and Section 9.5 (pages 50-51) of the TILA-RESPA Integrated Disclosure rule small entity compliance guide.

The Bureau has published a number of additional resources to help you comply with the TILA-RESPA Integrated Disclosure rule. They are available at http://www.consumerfinance.gov/regulatory-implementation/tila-respa/. If after reviewing these materials you still have a question about how to apply or interpret a specific provision of the rule please submit it to CFPB_RegInquiries@cfpb.gov.

So basically they refused to answer and/or clarify, right?
Yet they ended with 'contact us if you still have a question'.
Isn't that what you did???!!!

They already answered the question in the commentary, which they pointed too in the response to BCC:

They carved out one and only one exception: If you have a valid change of circumstances and are now within four business days of consummation, you get a one time shot at issuing the initial closing disclosure under 19(f)(1)(i) in lieu of a revised LE.

You can use that closing disclosure to reset your tolerances only under those specific circumstances and once you issue that initial closing disclosure under that circumstance or any other circumstance, you are done. There are no more opportunities to reset tolerances.

.19(e)(4)(ii) Relationship to disclosures required under § 1026.19(f)(1)(i). The creditor shall not provide a revised version of the disclosures required under paragraph (e)(1)(i) of this section on or after the date on which the creditor provides the disclosures required under paragraph (f)(1)(i) of this section

Once the closing disclosure is issued, there are no provisions to reset tolerances under .19(f).

If there is - show me. The regulation is written in progression. Once you pass on to .19(f) and cannot go back to .19(e)

Probably the two major factors in moving the CloD timing ahead to three BDs before consummation are (1) to provide the consumer with sufficient time to digest the figures and scramble to pull together the cash needed to close (in a purchase transaction) and (2) to force lenders and/or closing agents to get the final figures in sooner so that the potential for invoices appearing out of the blue at closing can be mitigated.

Allowing a lender to reset estimate bases after the CloD is delivered tosses the reason for the 3 BD delay out the window.

I personally believe that whoever wrote the "analysis" this aspect of the rule for the Small Entity Guide did the industry and the Bureau a huge disservice by leaving the door open to interpreting that analysis as permitting post-CloD resets.

And the Bureau simply compounds the problem by refusing to answer a straight yes or no question.

So I'm clear, in a scenario where the CD has been issued and something causes a delay, the closing date is pushed out and the rate lock will expire, one vendor was saying that a lock extension would be a consumer requested change, but I'm not seeing how we could pass on a lock extension fee once the CD has been issued, and where would we have disclosed that fee in the first place?

Seems to me that any lock extensions after the CD is issued must be covered by the lender. What do you think?

Once you issue a CloD you are locked into all the fees based on either the last LE issued due to a change in circumstance or the initial CloD in the special circumstance as described above.

I would look to see what is the cause of the delay.

The bank's problem? Well eating the fee is probably the correct thing to do.

The customer's problem, you will have to decide whether it is in the bank's best interest to delay the closing or treat the loan as approved but not accepted and start over again.

If it is some third party causing the issue - make them pay the difference as I assume there are agreements in place that established the closing date.

Thank you. There seems to be a lot of conflicting information out there, with everyone hanging their hats on the SECG.

I heard an attorney say that there are conflicts between the TRID rule (Regulation Z) and the CFPB's Small Entity Compliance Guide. He said that the attorneys that drafted the final rule are not the same attorneys that worked on the compliance guide.

The following language appears on page 14 of the 6/2015 version of the guide.
This guide summarizes the TILA-RESPA rule, but it is not a substitute for the rule. Only the rule and its Official Interpretations (also known as commentary) can provide complete and definitive information regarding its requirements. The discussions below provide citations to the sections of the rule on the subject being discussed. Keep in mind that the Official Interpretations, which provide detailed explanations of many of the rule’s requirements, are found after the text of the rule and its appendices. The interpretations are arranged by rule section and paragraph for ease of use. The complete rule and the Official Interpretations are available at http://www.consumerfinance.gov/regulatio...-regulation-z/.

In BankersOnline's Read A Reg pages, we have gone to no small effort to break the Official Interpretations down and include them on the page for the applicable section of most regulations. In the case of many sections of Regulation Z, we've gone the extra mile and broken the Interpretations down even further to place applicable Comments inline on the page for each section of the regulation so that, for example, the Comments for paragraph 19(f)(2)(i) and 19(f)(2)(ii) of section 1026.19 appear immediately following the text of those paragraphs on the page for section 1026.19.

I definitely prefer BOL's Read A Reg format over the CFPB's format and the ECFR web site's format.

Thanks. That's good to hear. We started doing it because we were frustrated with flipping back and forth or keeping two tabs open with the body and the comments in the regs. And when we confronted the complexity of the commentary in most of the recent changes to Reg Z, we knew we needed to chop the commentary up and put it where it's most useful, right after the part of the regulation it interprets. In fact, we were concerned that some newbie compliance folks might not even think to jump into the interpretations when researching the regulation, so putting the comments "in your face" helps to avoid that mistake.

I'll 2nd Reads Regs.....i go straight to BOL for all of my regulation reading, for all the reasons mentioned. Much easier to follow and keep things straight.

Bringing this back because I have a construction loan that has had the closing bumped out three times due to delays in completion and getting the 1004D (completion cert for appraisal).
The CD was properly delivered in time for the first closing date which was 8 days from where the closing is now hoped to be.
Now we've had to extend the rate and there's an extension fee.
The borrower still wants to close so the cc is all theirs (or the builders).
My thought is that we wait until we have the completion cert and then reissue the CD and include the extension fee.
Your opinions as to whether this is a viable solution or not would be greatly appreciated.

I would say you need to issue the CD in a timely manner to disclose the extension fee based on when you became aware of the fee. I think this would help in trying to prove your case, so to speak, if you are going to charge such fees to the borrower.

My thought is that we wait until we have the completion cert and then reissue the CD and include the extension fee.

Based on the above statement you are aware of the changed circumstance that will result in an additional fee.

Under the proposed rules you can reset your tolerance if you provide the revised CD within 3 business days of learning of the changed circumstance.

So, if you have a closing scheduled for Friday 11/4 but you learn of a changed circumstance today 10/31 you would have to provide the revised CD to the borrower on or before Thursday 11/3 to reset the tolerance.

IMO you cannot sit on the known changed circumstance until you have the certificate.

...if you want to impose the increased cost on the borrower.