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#2080686 - 05/26/16 06:05 PM Adding Mortgage Insurance
terpsfan Offline
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Can we add a monthly mortgage insurance payment after the LE is provided without a change circumstance? This was left out in error but since they is not in the closing cost section there is no tolerance correct?

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TRID - TILA/RESPA Integrated Disclosures Rule
#2080820 - 05/27/16 01:46 PM Re: Adding Mortgage Insurance terpsfan
Tracey, CRCM Offline
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Gorham, ME
We have had this happen 2x and after discussion with our legal counsel and audit firm, we were told no, that we cannot add it due to bank error. We had to obtain lender paid MI on both loans.
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#2080844 - 05/27/16 02:31 PM Re: Adding Mortgage Insurance terpsfan
Truffle Royale Offline

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You've gotten your answer from better sources than me and fwiw, I agree.
Bank error is never a valid CC.
The only valid CC for adding PMI is having the LTV change due to something like appraisal value comes in lower.
But knowing PMI is needed from the start and forgetting to put it on the LE means the bank is buying.

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#2080856 - 05/27/16 03:13 PM Re: Adding Mortgage Insurance terpsfan
justsayjulie Offline
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back home again
Agree with both Tracey and Truffle...
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#2080906 - 05/27/16 04:52 PM Re: Adding Mortgage Insurance terpsfan
Docs Offline
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Not sure if I agree.

In order to issue a revised LE there needs to be a CIC, and in this case the error is not a CIC, so a revised LE cannot or should not be issued. But assuming there is no fee tolerance issues, what prevents the lender from issuing their CD disclosing the PMI and closing the loan accordingly? Document the error in the file and make sure it does not happen again, and UDAP should not be an issue, either. What am I missing?
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#2080917 - 05/27/16 05:11 PM Re: Adding Mortgage Insurance terpsfan
Truffle Royale Offline

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TRID is all about bank transparency and what's best for the borrower.
You're adding a charge.
The bank made an error.
How do these two things add up to it's ok to make the borrower pay when they have no advance notice?
I'm going to take the hit and document and train.

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#2080966 - 05/27/16 06:53 PM Re: Adding Mortgage Insurance terpsfan
Docs Offline
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My point was that I am not aware of any provision in the TRID rule that would prohibit making the correction (adding PMI) on the CD and closing the loan accordingly. The borrower would have a minimum of 3 days advance notice between the time they receive the CD and closing to ask questions and decide if they wish to proceed. I agree that is not the best approach from a customer service standpoint, and could clearly lead to UDAP issues if it happened much more than once. Or are there specific requirements in TRID that I am overlooking? For example, if I was asked by bank management to point to the TRID rule that prohibits correcting the error on the CD I would draw a blank, other than the generalized statements Truffle noted above, which certainly have merit.
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#2080999 - 05/27/16 07:39 PM Re: Adding Mortgage Insurance terpsfan
terpsfan Offline
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That is where I am at. I am not sure what to point to for why we can not add it since it is not a tolerance item. If the monthly charge was just underestimated since it is not a tolerance item can it increase?
Last edited by terpsfan; 05/27/16 07:43 PM.
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#2081028 - 05/27/16 09:30 PM Re: Adding Mortgage Insurance terpsfan
justsayjulie Offline
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back home again
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#2081035 - 05/28/16 01:20 AM Re: Adding Mortgage Insurance terpsfan
Truffle Royale Offline

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The thread julie linked is on point.
terpsfan, my advice is to stop focusing on whether something is a tolerance item or not. That simply has no bearing and is only serving to cloud the issue for you.
Bottom line is the bank screwed up and they must pay the price because a bank error is never a valid cc.

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#2081068 - 05/31/16 12:58 PM Re: Adding Mortgage Insurance terpsfan
terpsfan Offline
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I agree it is not a change circumstance but since the monthly payment amounts are not tolerance items does there need to be a changed circumstance to be different on the closing disclosure. What can I point to when trying to make the bank eat this cost?

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#2081133 - 05/31/16 05:31 PM Re: Adding Mortgage Insurance terpsfan
Luv2run Offline
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Let's look at it in another light, suppose the property is a condo, and your lender fails to disclose the HOA fees on the projected payments table. Is the bank then on the hook to pay the condo HOA fees monthly for this borrower? For the life of the loan? While I agree that this type of error is not in the "spirit of the reg", is it necessary for the bank to absorb this cost?
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#2081159 - 05/31/16 06:58 PM Re: Adding Mortgage Insurance terpsfan
Truffle Royale Offline

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HOA fees are not a condition of getting the loan in the same manner that pmi is.
imho, it's cleaner for the bank to pay for their mistake on this loan rather than split hairs.
As much as I cannot give you regulatory support for my take on this, neither can you give me support for yours.
Which means if an examiner pulls this, I'm at a loss to defend my position of adding it on for the borrower.
And the bottom line is, the bank made an error.

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#2184150 - 07/05/18 03:23 PM Re: Adding Mortgage Insurance terpsfan
Kompliance Offline
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Joined: Aug 2012
Posts: 44
Pennsylvania
I'm bringing this topic up again, because I am only finding guidance on if this was left out in bank error, not for legitimate circumstances.
We have a situation where we have a cash out refinance and it was disclosed with no PMI because the estimated appraised value at application made the LTV below the limits for required PMI. After the LE was issued, the certified appraisal came back lower, causing the LTV to increase above the threshold and require PMI. Because insurance is an unlimited tolerance item, we added to their CD and did not re-disclose the LE. Am I missing something??

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#2184255 - 07/06/18 09:59 AM Re: Adding Mortgage Insurance terpsfan
rlcarey Offline
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Galveston, TX
Nope.
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#2184415 - 07/06/18 08:06 PM Re: Adding Mortgage Insurance terpsfan
Kompliance Offline
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Joined: Aug 2012
Posts: 44
Pennsylvania
Thank you, rlcarey. Sometimes I think I spend too much time overthinking these things smile

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