We do not lock rates. If our rates change between disclosure of the LE and the origination of the loan, can we increase the rate? If so, should we issue another LE that reflects only the change to the interest rate and maybe a cover letter that states that we are providing a revised LE because our rates for the product they requested has increased?

Thanks in advance for your help.

There are no LE tolerances set for interest rate. There is no need to give a revised LE because they will get the correct rate on the CD three days before closing. However, if the APR increases by more than .125% after you issue the CD then you have to send another CD and wait another three business days.

Under the old (pre-TRID) rules, if a loan was subject to both TILA and RESPA, an early TIL disclosure had to be given within 3 days of application. That was the only required TIL disclosure for the loan unless the APR became inaccurate, in which case a new disclosure had to be provided and there had to be three business days' wait before consummation. That all implemented MDIA. Under TRID rules there are two required disclosures and disclosure times, the LE and CloD. The CloD is the final disclosure of the rate and APR unless the APR become inaccurate after the CloD is delivered, in which case a new CloD has to be delivered, with a three-day waiting period from its receipt. Gone is the need to create a new LE when the rate's changed -- a CloD is issued anyhow, and that has a three-day wait attached, so it takes care of MDIA unless the APR on the CloD becomes inaccurate.

TRID says you can't surprise them w/ certain things at the closing table (like the rate). So the idea is the rate is finalized (even if you don't lock) when a Clod is provided such that it is in hand three days prior to closing. If there is a last minute surprise in some cases (see John's post above) there will be an additional three day wait from when the new CloD is in hand.

My understanding is that the rate can change after the CD is provided, and a revised CD would be provided at closing without a new 3-day wait provided that the APR does not change by more than 1/8 of one percentage point (for most loans) and the rate was not locked in by the lender (or the lock had expired). Ideally the lender would not spring this kind of change on the borrower at that late date, but I cannot locate any TRID reference that prevents or prohibits this particular borrower "surprise" scenario.

Sure, if there is a change (even related to the rate), legitimate and it's within the various prescribed tolerances (APR or fee) you're free to adjust at the closing table. I was simply trying to over simplify.