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#2104293 - 10/24/16 06:28 PM Is a post closing Closing Disclosure Required
LostinRegLand Offline
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WA
It is Monday and I am not feeling well so here I am hoping you fine people can help me.

I was just notified that a file we closed 28 days ago the Flood premium has decreased from the premium originally provided at closing. Additional information was provided to the insurance agent that allowed them to re-adjust the premium. My question is since the premium is less than what was collected and paid to the insurance agent do we need to issue a new Closing Disclosure as stated in:

1026.19(f)(2)(iii) If during the 30-day period following consummation, an event in connection with the settlement of the transaction occurs that causes the disclosures required under paragraph (f)(1)(i) of this section to become inaccurate, and such inaccuracy results in a change to an amount actually paid by the consumer from that amount disclosed under paragraph (f)(1)(i) of this section, the creditor shall deliver or place in the mail corrected disclosures not later than 30 days after receiving information sufficient to establish that such event has occurred.

Not sure if this meets the "an event in connection with the settlement of the transaction" or not. I want to say no since this was between the borrower and their insurance agent that allowed the premium to be adjusted and not in connection with the settlement but I have been wrong before.
Last edited by LostinRegLand; 10/24/16 06:29 PM.
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#2104468 - 10/25/16 03:32 PM Re: Is a post closing Closing Disclosure Required LostinRegLand
John Burnett Offline
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If the result of the lower premium is that the insurance agent is refunding part of the premium collected at closing, the answer is yes.

If the refund was made via the settlement agent back to you as the lender, you will negotiate that check and issue a cashier's check for the refund amount, and tweak the applicable entry, subtotal, totals and the Calculating Cash to Close numbers to issue a revised Closing Disclosure (CloD), making sure that the only date on the top of page 1 of the disclosure that changes is the "Date Issued," which should be the date you complete the new CloD. Tuck the check and the CloD in an envelope with a letter explaining what happened.
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#2104498 - 10/25/16 04:54 PM Re: Is a post closing Closing Disclosure Required LostinRegLand
LostinRegLand Offline
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Joined: Jun 2014
Posts: 82
WA
Thank you John. That is the route I had them follow yesterday just to err on the side of caution with a side note of finding out how the refund will be handled. They are still following up on how the refund will be returned to the borrower. If the refund is returned directly to the borrower from the agent would you then still send an updated Closing Disclosure with a letter explaining what happened and to expect the refund from the agent?

I have a follow up question if we had been notified of the change in premium later this week, after the initial 30 days after consummation would you still issue a new Closing Disclosure even though the changed occurred after the 30-day period following consummation just for an abundance of caution?

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#2104507 - 10/25/16 05:30 PM Re: Is a post closing Closing Disclosure Required LostinRegLand
John Burnett Offline
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I was wondering about that as I composed my earlier answer, but figured I'd wait to see if it's an issue.

If the refund will go directly to the borrower, I would still do a revised CloD and include a letter asking the borrower to watch for the refund from the agent. But I'd be darned sure the agent commits to that, first.

If you were notified after the 30-day period, you will not have a violation, but I'd suggest sending a revised CloD just to tie everything up in a pretty bow.
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#2106135 - 11/05/16 09:12 PM Re: Is a post closing Closing Disclosure Required LostinRegLand
rlcarey Online
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Galveston, TX
I don't think I agree. This is a subsequent event and an issue purely between the insurance agent and the consumer. The bank doesn't have a dog in the hunt. The insurance premium at the time of closing was correct.
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#2106212 - 11/07/16 04:44 PM Re: Is a post closing Closing Disclosure Required LostinRegLand
John Burnett Offline
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John Burnett
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Cape Cod
I'll concede this one to Randy. No violation, no error by lender. No revised CloD.
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