Situation where the lender was taking an application and was quoting rates to a borrower. Prior to rate lock the LE was produced with a rate of 4.00%. However, during the process of the application, it was determined that the loan was not a limited cash out but a cash out and the lender forgot to click on the "update fees" button. The LE was issued for the fees set at limited cash out. One day later the rate was locked at the same 4.00%. The rate lock LE was produced and it was noticed that the LLPA fees were higher than on the initially disclosed LE. My question is, do we have a change in circumstance? The fees that went higher are based on the interest rate which is what is being re-disclosed. My problem with that is the rate didn't CHANGE from the initial LE to the rate lock redisclosed LE. Granted the borrower went from limited cash out to cash out refi, but now we are sitting at day 3 after the rate lock and day 4 after knowing that the loan was going to be cash out.
Long story short, do we have to eat the difference of the higher LLPA, or can we lock the rate and issue the LE with the higher fees?