Sorry I'm arriving late for this discussion.
After reading all the discussion twice, my understanding is that:
- this loan is subject to Section 1026.19(a)(1)(i) of Regulation Z
- estimated disclosures were provided timely and they were accurate
- final disclosures (required by Section 1026.18) were given
- a nonexistent fee exceeding $100 was accidentally included in the disclosed final FC and APR
- inclusion of the "accidental fee" caused the final FC and APR to be overstated
- this error was discovered during a quality control review three months after closing
Unless I missed something, there is no violation...and therefore no need for any kind of action.
Section 1026.18(d)(1) says In a transaction secured by real property or a dwelling, the disclosed finance charge
and other disclosures affected by the disclosed finance charge (including the amount financed and the
annual percentage rate) shall be treated as accurate if the amount disclosed as the finance charge:
(ii) Is greater than the amount required to be disclosed.
With regard to issuing a corrected TIL, what does this accomplish?
This question deserves more discussion.
Disclosures required by Sections 1026.18 and 1026.19 can be "corrected" at any time prior to consummation. If an error exists at the moment the loan is consummated, there is a violation. Nothing you can do after consummation will "correct" the faulty disclosure or eliminate the violation.
As a result of the violation, Section 130(a) of the TILA makes you civilly liable to the the borrower for damages (if the FC or APR is understated), a penalty, and court costs. If you want to eliminate the civil liability, Section 130(b) of the TILA tells you to: notify the borrower that there was an error (violation) and
take whatever action necessary to guarantee that the borrower does not have to pay more than the FC or APR (commonly known as "reimbursement" or "restitution.") Notification can
include a revised disclosure if you need to restate non-FC/APR items (late charges or security interest, for example), but any other form of notification is also effective.
In a case where reimbursement is necessary but not done, notification puts the borrower on notice that there were TIL violations but does not eliminate the civil liability. For the borrower's attorney, this amounts to a "sue me" sign on your back.