Skip to content
BOL Conferences
Thread Options
#1505150 - 02/04/11 03:02 PM Counteroffer Question
KDF Offline
Member
KDF
Joined: Jul 2009
Posts: 79
Minnesota
I've reviewed some previous posts but haven't found the answer to my question.

Scenerio: Customer completes an application and we provide a GFE. The loan is then denied with a counteroffer.

Counteroffer is a different loan product so we have a changed circumstance and redisclose.

In a case like this, is the bank still bound by the fees on the original GFE unless the fees change BECAUSE of the new loan product (changed circumstance)?

Or are we starting all over as if we have a new application?
_________________________
"Sometimes that light at the end of the tunnel is a train."
Charles Barkley

Return to Top
RESPA
#1505348 - 02/04/11 04:43 PM Re: Counteroffer Question KDF
Truffle Royale Offline

10K Club
Joined: Jul 2003
Posts: 17,395
Changing products by itself is not a changed circumstance so you can't redisclose based on that alone and yes, you're still bound by the fees on the original GFE.

What happened to cause the change? Did the appraisal come in low? Credit now as high?

Return to Top
#1505377 - 02/04/11 04:58 PM Re: Counteroffer Question Truffle Royale
BankerBA Offline
Member
Joined: Jul 2006
Posts: 67
I have advised my mortgage officers to deny the customer flatly and start a new application to avoid being bound by the same settlement costs. Previously, we were eating the difference in costs. Truffle Royale, do you think we will invite criticism from examiners with this practice?

Return to Top
#1505405 - 02/04/11 05:27 PM Re: Counteroffer Question KDF
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
Originally Posted By: KDF
I've reviewed some previous posts but haven't found the answer to my question.

Scenerio: Customer completes an application and we provide a GFE. The loan is then denied with a counteroffer.

Counteroffer is a different loan product so we have a changed circumstance and redisclose.

In a case like this, is the bank still bound by the fees on the original GFE unless the fees change BECAUSE of the new loan product (changed circumstance)?

Or are we starting all over as if we have a new application?


You sent a denial offering to consider them under different terms.

If they indicate they want to pursue the alternative terms then you have a changed circumstance and can issue a new GFE at that time with the applicable fees for the new terms. But until they indicate they want to apply for/accept the alternative terms you have no "changed circumstance" to issue a revised GFE. If they don't indicate they want to pursue the alternative terms then you need do nothing since you sent them the AAN giving the reasons you've denied the request as applied for.

Whether you treat is as a "new" application if they want to proceed would be decided by your application procedures.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#1505483 - 02/04/11 06:37 PM Re: Counteroffer Question Dan Persfull
Truffle Royale Offline

10K Club
Joined: Jul 2003
Posts: 17,395
Dan, what if there wasn't an AAN, just a counter-offer? Then they'd be stuck, correct? Or am I having a Friday mix-up in my brain?

Return to Top
#1505497 - 02/04/11 06:52 PM Re: Counteroffer Question Truffle Royale
RR Joker Offline
10K Club
RR Joker
Joined: Nov 2002
Posts: 20,654
The Swamp
Generally, you can't counter-offer without a denial in conjunction with that counter-offer.
_________________________
My opinion only. Not legal advice.

Say you'll haunt me - Stone Sour

Return to Top
#1505525 - 02/04/11 07:07 PM Re: Counteroffer Question RR Joker
Truffle Royale Offline

10K Club
Joined: Jul 2003
Posts: 17,395
Just went to a training session yesterday on Denied Loan Requirements. Under Counteroffer it says that a creditor has to notify an applicant of action taken with 90 days after notifying the applicant of a counteroffer if the applicant does not accept or use the credit offered. The presenter went on to state that means you have to send out an AAN.

If we look at DU and decide it's not going to work so we counter, we wouldn't send out an AAN unless the borrower opted not to continue. Then we'd deny on the original.

Am I missing something?

Return to Top
#1505528 - 02/04/11 07:09 PM Re: Counteroffer Question Truffle Royale
RR Joker Offline
10K Club
RR Joker
Joined: Nov 2002
Posts: 20,654
The Swamp
TR, if you give a verbal CO, you'd have to follow-up, but I would say within 30 days, not 90. If you give the AAN WITH the CO and they don't accept...you are done.

iv) 90 days after notifying the applicant of a counteroffer if the applicant does not expressly accept or use the credit offered.
Last edited by RR joker; 02/04/11 07:10 PM.
_________________________
My opinion only. Not legal advice.

Say you'll haunt me - Stone Sour

Return to Top
#1505533 - 02/04/11 07:12 PM Re: Counteroffer Question RR Joker
Truffle Royale Offline

10K Club
Joined: Jul 2003
Posts: 17,395
Got it. Thanks for the site. I'll have to fine tune this here.

So, to bring this back to the original poster's question, even tho you give the AAN, if the borrower accepts the counter, you can redisclose the GFE and move on, right?

eta: Just had a talk with my underwriter. The reason we don't do it this way is because if we send out the AAN, we kill the rate lock too. So we counter and wait and AAN later if necessary. Wanted to share in case others act similarly.
Last edited by Truffle Royale; 02/04/11 07:35 PM.
Return to Top

Moderator:  QCL