Hello Everyone,

The department made an error and I want to make sure I am correct in my recommendation.

The borrower requested a rate change which changed the corresponding lender credit because of the pricing difference.

They issued the revised LE on 05/05/2016. The revised LE was assumed to have been received the ninth. The initial CD was issued in-person on the 9th.

Because the CD was issued the same day IMO we must compare the final costs to the initial LE. I think the Bank will have to pay the difference for the reduction in lender credit because the revised LE was assumed received the same day as the CD was issued.

Do you concur? Would I treat the lender credit the same as a 0% tolerance fee in this instance?

To further complicate the matter they marked that the revised LE was received on 05/07. My determination is that without sufficient evidence of receipt of the revised LE that the Bank must reimburse the consumer based on the comparison from the initial LE.

Thank you in advance for your assistance.

Just double checking. Thank you!

The prohibition concerning "same day" and the LE and CloD concerns the day the disclosure is provided, not the day it is received. The verbiage in 1026.19(e)(4)(ii) about presumed receipt concerns whether the revised LE is received at least four bus days before consummation. If your revised LE was issued within 3 business days of learning of the changed pricing, and it was issued one or more days before the closing disclosure was issued, and the LE was received at least 4 BDs before consummation, the LE was valid and adjusted the lender credit amount in connection with the pricing change.

Hi John,

Thank you for responding. If the department does not have evidence of receipt prior to the 9th, then they consummated the loan on the 3rd day after receiving the LE. This would make the LE invalid, correct?

Also, I have not looked at it that way before (provided vs received). For my own knowledge, are you saying we could mail out a revised LE on a Monday, do an in person CD on Tuesday (two days before assumed receipt of the LE) and if we closed a week later it would be fine? We have always considered that the revised LE must be received before the initial CD is received. We have done in person revised LE/Initial CD on back to back days as well as mailed the revised LE one day and the initial CD the next. We have never (until now) issued the CD prior to the receipt of the revised LE.

Not debating, just trying to understand. Thank you!

bump

I'm going to post on this later today, God Willing. I was looking at this earlier and had what I think is a good response

Just under the gun on something at the moment.

Thank you!

Not sure if you got a little thrown off with your terminology, but if the revised LE was provided on the 5th and they closed the 3rd Business Day after (the 9th), then you have a couple issues. You didn't wait the correct amount of time from receipt of the revised LE to close. And, you don't seem to have waited the correct amount of time from delivery of the CD (also the 9th).

With that being said, my understanding aligns with Mr. Burnett. The LE has to be provided prior to the initial CD, so under your scenario question, yes, you could do it like that (though it may cause some issues with the borrower becoming confused). The regulation (12 CFR 1026.19(e)(4)(ii) specifically talks about the provision of the disclosure, not the receipt.

In your initial example, you would be fine to compare the revised LE provided on the 5th to the initial CD issued on the 9th. However, you seem to have violated the timing requirements related to consummation. Not sure if this would be looked at as a timing violation only, or if there would be issues with fee comparison.