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#2040632 - 09/25/15 05:14 PM Rate Lock on LE
Cheli Offline
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Cheli
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Hi - May a guru please advise if the rate lock on the LE is intended to replace a FI's Rate Lock Agreement? The LO's are asking to do away with our Rate Lock Agreement. I don't think the intentions of adding the rate lock info in the top right corner of the LE was to replace a rate lock agreement!...

Thoughts?

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TRID - TILA/RESPA Integrated Disclosures Rule
#2040638 - 09/25/15 05:31 PM Re: Rate Lock on LE Cheli
John Burnett Offline
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The rate lock information on the LE is informative and a piece of the disclosure. It certainly is not a contract. You have to have a rate lock agreement in place to indicate YES to the rate lock question.
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#2040664 - 09/25/15 06:06 PM Re: Rate Lock on LE Cheli
Cheli Offline
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That was my thinking as well...Thank you for the confirmation, John. I appreciate it.

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#2043605 - 10/09/15 04:39 PM Re: Rate Lock on LE Cheli
Mel in WA Offline
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We have implemented a written rate lock agreement because of TRID, which means we are re-disclosing on every loan. It would be a perfect storm if the application was complete (6 items) and the borrower signed the rate lock agreement at the same time. So, we are always marking "no" on the initial LE, then turning around and sending out an LE with 'yes'. Is this what the CFPB intended??

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#2043650 - 10/09/15 07:03 PM Re: Rate Lock on LE Cheli
Truffle Royale Offline

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apparently it is, Mel, if you want to provide an LE that says 'yes' in the Rate Locked? area.
If you're not getting a rate lock agreement signed at the time of application, you will have to redisclose when you do if you want to give an LE marked 'yes'.

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#2043684 - 10/09/15 07:58 PM Re: Rate Lock on LE Cheli
Mel in WA Offline
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Truffle - We sell most of our loans on the secondary market, so the rate could be locked between us and the investor at the time the initial LE is provided. However, the borrower has not yet returned the signed rate lock agreement, so we have to mark 'no'.....then they return the signed agreement on the 4th day after application, so we have to re-disclose with 'yes'. Two LEs within 2 days. Ugh.

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#2043740 - 10/10/15 12:53 AM Re: Rate Lock on LE Cheli
Truffle Royale Offline

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Pretty much the same scenario here, Mel.
We do have some banks that lock the rate with the borrower at time of application and have the agreement signed then.
They lock with the investor as soon as the borrower walks out the door.
Then they just do one LE that they mark 'yes'.
It doesn't work all the time. (think any other application than face to face).
but sometimes is better than none.

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#2043745 - 10/10/15 11:50 AM Re: Rate Lock on LE Cheli
Kathleen O. Blanchard Offline

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Have any of you discussed with your legal counsel having the customer sign and fax or email the rate lock agreement, and then mail the hard copy?
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#2043746 - 10/10/15 02:36 PM Re: Rate Lock on LE Cheli
Truffle Royale Offline

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We do allow fax but not email. Under the impression that this would have to be Esign compliant, Kathleen.
Most smaller community banks do not do Esign.

But you're still getting the agreement back AFTER you've delivered the original LE so you have to turn around and do another because rate lock is still the only time a redisclosure is mandated.

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#2043747 - 10/10/15 02:50 PM Re: Rate Lock on LE Cheli
Kathleen O. Blanchard Offline

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Why esign? It is a contract, not a disclosure mandating esign. I mentioned legal counsel to see how they feel about a faxed or emailed signature. It can be a legal signature.

And why, if you send immediately and they return immediately, does it have to be post LE?

I am simply suggesting to think outside the current process...what might be tweaked?

And I know many small banks that have esign processes via their mortgage origination system or separate esign process.
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#2043761 - 10/11/15 01:02 AM Re: Rate Lock on LE Cheli
Truffle Royale Offline

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The idea of using Esign seemed a logical extension of the notion that private information (name, property, loan amount, rate) should not be sent via unsecured email.

In reply to your second paragraph, the word 'send' is the reason it has to be post LE. Mail isn't instantaneous.
Fax machines are not always available to applicants.
And while you may know many small banks that have esign, very few of the banks that we work with do.

This is only a problem on applications that are not taken face to face and locked at that time.
I see no way around just having to do a redisclosure.
But it helps to be able to brainstorm with others in the same situation.

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#2043763 - 10/11/15 01:44 PM Re: Rate Lock on LE Truffle Royale
Kathleen O. Blanchard Offline

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Don't forget secure email is not necessarily esign. Most banks have secure email.
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#2043821 - 10/13/15 12:43 PM Re: Rate Lock on LE Cheli
John Burnett Offline
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Clarification: When it comes to E-SIGN, remember that the receiving party is the one that needs to provide consent for electrons to replace paper and ink. Because you are not a consumer, you can simply agree to accept an electronic message. The much-discussed E-SIGN "dance" with demonstrable consent is only required when a consumer is agreeing to accept "written" documents in electronic form.
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#2043830 - 10/13/15 01:44 PM Re: Rate Lock on LE Cheli
MonicaMc Offline
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We will be accepting e-mailed rate agreements - the LO will attach the rate lock form and restate all terms of the agreement in the e-mail and the borrower will respond that they agree and wish to lock. And we are not requiring E-Sign on these.

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#2043840 - 10/13/15 02:10 PM Re: Rate Lock on LE Cheli
Truffle Royale Offline

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May I ask for a point of further clarification, John?
Are you saying that esign isn't required for this part of TRID because it's not specifically called for in the Reg?
I know that sending the LE or CloD is referenced as only acceptable via Esign.
If I understand what you're saying, only those items specifically referenced in the Reg must follow Esign but those other elements, like the rate lock agreement, don't have to.
If that's true, that will make life a tad easier.

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#2043841 - 10/13/15 02:17 PM Re: Rate Lock on LE Truffle Royale
Kathleen O. Blanchard Offline

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The customer is sending an agreement to you, the bank. You may accept in any form you wish.
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#2043862 - 10/13/15 02:51 PM Re: Rate Lock on LE Truffle Royale
John Burnett Offline
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Originally Posted By Truffle Royale
May I ask for a point of further clarification, John?
Are you saying that esign isn't required for this part of TRID because it's not specifically called for in the Reg?
I know that sending the LE or CloD is referenced as only acceptable via Esign.
If I understand what you're saying, only those items specifically referenced in the Reg must follow Esign but those other elements, like the rate lock agreement, don't have to.
If that's true, that will make life a tad easier.


I was assuming knowledge of E-SIGN.

The rate lock agreement has to be an executed agreement. In most states that I am aware of, that means it has to be written and signed. E-SIGN allows for it to be electronically delivered TO YOU by the consumer, because you can agree, under E-SIGN, that the bank will accept electronic delivery, and you, as a non-consumer, don't have to provide demonstrable consent. The demonstrable consent part of E-SIGN is required when a consumer is agreeing to accept electronic delivery FROM YOU.
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#2043867 - 10/13/15 02:56 PM Re: Rate Lock on LE John Burnett
Truffle Royale Offline

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We don't use Esign so my knowledge is limited to what I've read.
And what I've read is what led me to believe that yes, we'd need to be using Esign to send and receive the rate lock agreement.
But Kathleen's post above led me to believe that Esign wasn't necessary.
Quote:
Why esign? It is a contract, not a disclosure mandating esign. I mentioned legal counsel to see how they feel about a faxed or emailed signature. It can be a legal signature.

Now do you understand my still existing confusion? confused

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#2043871 - 10/13/15 03:01 PM Re: Rate Lock on LE Cheli
MonicaMc Offline
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We view E-Sign as being required when it is a "time-sensitive, government mandated" disclosure. So for any form, or disclosure that we're required to deliver in a certain amount of time, we require E-Sign. If it is a Bank form that we've created as an overlay (such as the rate lock agreement), then we do not require E-Sign.

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#2043875 - 10/13/15 03:13 PM Re: Rate Lock on LE Truffle Royale
Kathleen O. Blanchard Offline

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I suggested discussing with legal counsel because the ops or lending area should not make changes willy nilly without fully understanding the implications. The bank should have an official position, despite the fact that esign is not required for a rate lock agreement.
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#2043884 - 10/13/15 03:50 PM Re: Rate Lock on LE Cheli
Truffle Royale Offline

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Opting to spend money on a legal consultation is up to the individual banks we deal with to do, Kathleen.
I was just trying to verify whether or not esign was required for the rate lock per the Reg.

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#2043887 - 10/13/15 03:56 PM Re: Rate Lock on LE Cheli
Kathleen O. Blanchard Offline

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Nope!
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The HMDA Academy
www.kaybeescomplianceinsights.com

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#2087559 - 07/12/16 03:48 PM Re: Rate Lock on LE Cheli
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As long as we follow the E-Sign Act’s demonstrable consent and disclosure provisions, and receive a response back from the applicant they did receive the faxed disclosures (thereby documenting the day of “receipt”) are there any impediments in delivering the TRID disclosures via fax regulatory-wise?

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