Yes, that would be a valid changed circumstance.

Up to the time at which the CloD is issued. After that date, no so much.

For portfolio loans, customer phones in an on 6/1 & we set the interest rate as of this date. We issue the LE & indicate the rate is not locked since we don't have a signed lock agreement. We mail the LE & lock agreement to the customer & we receive back the signed lock agreement on 6/10.

Currently, we send an updated LE to the customer indicating the rate is locked even if there are no changes in fees, etc.

Am I understanding this thread that now I wouldn't need to send the updated LE since there were no fee changes?

customer phones in an on 6/1

You mean they phone in an application??

Oops, yes. They phone in their application on 6/1.

Am I understanding this thread that now I wouldn't need to send the updated LE since there were no fee changes?

Yes

I just happened to stumble across this thread and noticed a change of heart among the gurus when it comes to re-issuing an LE for a rate lock.

Back in the fall of 2015, I posted that we sell most of our loans on the secondary market, so the rate is usually 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 mark "no" on the LE. Then, when they return the signed agreement (which is usually within days of providing the initial LE), we are re-disclosing with "yes". It was confirmed that this is what needed to be done in order to comply.

If I'm reading this correctly, I only have to re-disclose the "yes" LE if the lock increased any interest rate dependent charges.....True?!? This would be the best news of 2016 and save us a lot of time in the backroom. They will love me.

Bump - rlcarey? John B?

A careful read of 1026.19(e)(3)(iv)(D) and related Official Interpretations led me to that conclusion, after discussing it with Randy Carey. All of that language pivots on whether there is a change in a rate-related cost as a result of the lock.

When the first version of that provision appeared, it had its own internal deadline for completing a revised LE. And that was because the first version required this particular revised LE, unlike the revised LEs for other changed circumstances, to be sent on the day the rate is locked! When the Bureau later revised that to allow for the same three-business-day period afforded for other changed circumstances, instead of removing the "same business day" requirement from paragraph (D) to let the three-business-day rule referring to the other changed circumstances also refer to paragraph (D), it changed the paragraph (D) deadline to the third business day.

When we had first looked at this provision, we had determined that the revise LE would have to be sent, even if there were no changes to any cost already disclosed, just to update the disclosure under 1026.37(a) of "Yes" to the rate lock question, and the addition of the rate lock expiration date. Frankly, that made sense to us then.

But the language in paragraph (D) and commentary still all hinges on whether there is a change in interest-rate related costs. In fact, at no time in paragraph (D) or the related Commentary is the updated disclosure of rate lock expiration date even mentioned. As we (Randy and I) now interpret this provision, if you do have some changed costs resulting from the execution of a rate-lock, you will have to provide a revised LE within three business days, and you should update the rate lock NO to YES and add the expiration date. But if you don't have any changes in costs resulting from the rate lock with the consumer, there's no need to send a revised LE.

Since this has been so much work for us, we have discussed engaging an attorney to revisit the rate lock/re-disclosure issue. Also, we recently had a TRID audit by an external firm and they commented that we are re-disclosing the LE way too much.

Thanks so much for your detailed explanation - it helps a ton!

If an LE reflects a locked rate but upon further review an increase in the rate is warranted is it OK to issue a revised LE reflecting the new rate as also being locked even though the initial locked rate has not expired and there may or may not be changes in interest related costs.

how can you lock a rate and then determine an increase in the rate is warranted?
The rate lock is a signed agreement between the bank and the borrower. If I was the borrower, I wouldn't agree to you increase a rate you'd already guaranteed me through a signed agreement.

The rate was initially locked on the LE as a system default. Upon further review of the borrower's credit it was determined they did not qualify for the rate. I agree with your comment however matters the agreement requires an indication of whether the preference is to lock or float. Neither option is chosen and the increased rate was not disclosed via a revised LE but on the closing disclosure. I'm not sure what I should do about this.

Whatever the agreement allows for choices, the fact that the LE indicates that the rate was locked puts your bank in a difficult spot. Your system defaults need correcting. You could have a UDAAP situation if you consistently have problems like this. Talk to your attorney concerning how to proceed.