Happy Monday! I officially have a Disney vacation hangover, so I apologize in advance for any posts this week!

So while I was gone, a question came up regarding the LE/CD review which I complete manually as due to system issues, I do not trust the figures (with good reason- had to make refunds due to the inaccurate figures).

When I am doing the review, I use the LE that was issued at the time of application OR the LE that was issued due to a valid change circumstance (meaning a change that affected fees in the 0% or 10% tolerance). I then do a line by line comparison to ensure the LE/CD comparison chart on page 2 is pulling accurately. If the LE figures are not correct (system not pulling from correct LE), I have them updated to show the "good faith" comparison.

While I was out, some CD's went out with the most recent LE figures in our system (which were not issued due to a change circumstance) so I feel that the comparison is not accurate. I am being asked what is the harm- why can't we just use the most recent figures that were on the most recent LE as that is showing the accurate cash to close-

Am I crazy?

If every "updated" LE issued is only issued because of a valid changed circumstance triggering an increased cost, and it's timely issued, and no cost is increased on the LE other than those triggered by the changed circumstance, and you've correctly categorized costs into 0% increase tolerance, 10% increase tolerance and unrestricted increase groups, you can use the most recent LE. But that's a mighty big "IF" with lots of places to foul up. You really should take each cost that has increased from the estimate on the initial LE and trace its history through any other LEs to figure out what dollar value should be compared with the actual cost paid by or imposed upon the borrower.

And then there is the more obvious problem -- Any LE other than the first, if not timely issued due to a legitimate changed circumstance is not an LE you can use when comparing estimated costs with actual costs. And you have said the most recent LEs in your system for the loans in question were not issued due to a changed circumstance.

You can only reset your tolerance if the revised figure exceeds the applicable threshold.

If your initial fees are disclosed at $1000 and you later find that a charge will increase these fees to $1075 you can, at your discretion, issue a revised LE reflecting the $1075 but because you are still within the 10% you cannot reset your tolerance.

At closing the fees increased to $1,125 and a revised LE was not issued. Your tolerance comparison would be to the $1,000, not the $1,075. You now have a $25 cure to issue the consumer.

Thank you both.

I will continue to use either the first LE or the most recent, accurately disclosed, valid change circumstance LE.

John- I do take each cost from the initial LE to actual cost, so that is good!

Our system does not recognize a true valid change circumstance, it makes our processors "redisclose" for any changes regardless if fees have breached tolerances or not. So when it does the compare within the system, it just pulls the last LE (I should note that not all LE's are actually sent to the customer- I review all LE's that go out and we only send if there is a valid change circumstance) our system just thinks they are.

Dan,

In your example above, with the fee increase to $1075, we don't have to issue an LE because its within tolerance, correct? In that case, we can still charge the customer the $1075 and not the $1000?

Correct.

Example: Closing 08/01/2016 (borrower signed and provided the cashier check for closing) however funding did not occur until 08/03/2016 due to some delays. We collected extra pre-paid interest, do we need to provide a revised CD and refund the extra interest or can we apply the extra prepaid interest towards the loan.

1026.19(f) Refunds related to the good faith analysis.
If amounts paid by the consumer exceed the amounts specified under paragraph (e)(3)(i) or (ii) of this section, the creditor complies with paragraph (e)(1)(i) of this section if the creditor refunds the excess to the consumer no later than 60 days after consummation, and the creditor complies with paragraph (f)(1)(i) of this section if the creditor delivers or places in the mail corrected disclosures that reflect such refund no later than 60 days after consummation.

1026.19(e)(3)I and ii

I. Fees paid to the creditor.
ii. Fees paid to a mortgage broker.
iii. Fees paid to an affiliate of the creditor or a mortgage broker.
iv. Fees paid to an unaffiliated third party if the creditor did not permit the consumer to shop for a third party service provider for a settlement service.
v. Transfer taxes.

Since prepaid interest is not part of any of the abovementioned category, is revised CD required and also the refund.

Tagging along to this thread and looking for the specific cite that says if the fees increase more than the 10% tolerance, you are allowed to re-issue a Loan Estimate and reset your tolerances at that point.

Thank you.

1026.19(e)(3)(iv)