Has anyone run into this situation - Bank does not "rate-lock" per se, but obviously when the loan documents are drawn, the rate is "locked in" because - well, there is the rate right there on the Note!

So - I have heard of some auditors (not examiners mind you) say that since the rate is "locked" on the loan documents, a new GFE must be issued.

I personally think that's a waste of time, money, resources, paper, postage and only confuses everyone that much more.

What say you?

I say the auditors that say that are all wet. The rate is not locked and can float up to the time of closing. Without a rate lock, the rate is subject to change until the customer's signature ink hits the paper.

I disagree, Randy. Locking the rate is the only time that RESPA mandates a new GFE must be given. I'm sure that's what the auditors are referring to.

But doing it doesn't have to be a waste of time or postage or delay the closing. If you're locking the rate at the closing table, then just hand them the rate lock GFE before you start the closing.

Now, if the rate on the initial GFE is different from the rate on the closing docs AND that change affects the APR more than .25%, than you're caught by MDIA and have to give a new ETIL and wait the appropriate amount of time.

The bank setting the rate for closing when the consumer elected to float is not the consumer locking the rate. The consumer must exercise a rate lock option in order for the reissue mandate to kick in.

FWIW, I agree with Randy and Dan. A float is a float. For HPML purposes, we use the date the papers are drawn up for closing to re-check the loan...but no new GFE would be required.

I'll standdown and defer to the others on this one.
We don't do anything like this so that's why I thought the lock would occur at closing.
Just for the record, has this been touched on officially or even sent to HUD as a querry? If an auditor questions it, I'm concerned an examiner might too.

Q&A 19 on page 8 of the FAQs is pretty specific in its answer.


. . . if a borrower locks the interest rate after the GFE has been issued . . .

and absolutely no disrespect intended, but auditor's are not necessarily all that particularly knowledgeable about RESPA either.

I was just asking if anything had been said beyond the p8, Dan. There's so much that's been interpolated from the FAQs yet not confirmed by HUD. My fav is the cure for Blocks 1 and 2 and line A on the GFE. If I'm feeling gutsy, I can always ask when the examiners hit here in 2011...after they're done examining, of course.

Bringing back the dead here. I have an investor that says that our last GFE must match our final loan amount, I know that is not a RESPA requirement, but I cant find where to cite to show my investor when in fact its required to re-disclose a GFE.
help

RESPA FAQ p.8 - 19) Q: If a GFE has been provided and the interest rate has not been locked, can the loan originator provide a revised GFE when the borrower later locks the interest rate?
A: Yes, if a borrower locks the interest rate after the GFE has been issued, a revised GFE must be issued within 3 days of the interest rate lock reflecting the date that the interest rate lock is good through in Line 1 and ―N/A‖ in Line 4 of the ―Important dates‖ section of the GFE. Any interest rate-dependent charges (Block 2, Line A and Block 10 on the GFE) and terms that changed must also be updated on the revised GFE.

That is the only reference to when you MUST redisclose.
Whoever is telling you different at your investor is wrong. Experience tells me it's likely a low tier employee. Go over their head and ask to speak to the compliance manager. I doubt you'll even need the reference above if you can get to the top. They KNOW that's not right.

Thank you!!!

Keep in mind though, it is their sandbox and their rules. While not required or not even correct, there are investors who will not budge from that requirement and if they are buying your loan, it is their prerogative to get to decide which deals to buy/fund.

We have a scenario where the LO floated disclosures and the next day locked the rate; however, we missed the three day window for re-disclosures.

Do any of you have experience with the implications on this? Note that the LO committed to raising the credit $200 at time of rate lock, which we would apply as a lender credit on the HUD-1.

Based on experience, do investors automatically see this loan as ineligible for purchase?

Appreciate any insight in advance.

I'm confused.
Do you mean the LO issued for a floating rate and then missed redisclosing when he locked it a day later?
That's a violation but there's nothing that can be done to fix it. As long as it's a one time thing, not a pattern and practice, you should be ok at exam time.

As for the additional credit promised, just give it on the HUD. You don't have to show it on a GFE to give it.

Our investors won't accept any loan with late disclosures. Pretty much an automatic portfolio loan.

Ditto.