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#2145723 - 09/12/17 07:52 PM **Discount Fees and redisclosures - HELP!**
BBoyd Offline
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BBoyd
Joined: Mar 2002
Posts: 2,494
MI
I'm hoping for a quick answer for one of our credit unions on this....the loan is scheduled to close on 9/15/17... Here's the question:

I have a compliance question about whether we need to re-disclose on a file and wait the three business days if a member decides to pay discount fees for a lower interest rate? We have a situation where the borrower is getting $6,000 in sellers concessions and we can only account for $4,300 worth of closing costs. We would like to add 1% for a discount fee so that the member can buy down the interest rate by .25%. Is this something that we can do without having to wait the three business days for re-disclosure? The file is scheduled to close on Friday, September 15.

Thank you for your help on this.
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Lending Compliance
#2145732 - 09/12/17 08:21 PM Re: **Discount Fees and redisclosures - HELP!** BBoyd
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,880
Galveston, TX
Depends on whether it throws the APR out of tolerance from the initial CD. That will cause a new three business day wait.
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#2145733 - 09/12/17 08:34 PM Re: **Discount Fees and redisclosures - HELP!** BBoyd
BBoyd Offline
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BBoyd
Joined: Mar 2002
Posts: 2,494
MI
It's a borrower initiated fee to obtain a lower rate. If the APR is not affected, would there still be a wait?
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#2145735 - 09/12/17 08:42 PM Re: **Discount Fees and redisclosures - HELP!** BBoyd
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,880
Galveston, TX
Three things cause an additional wait, regardless of what causes them:

(A) The annual percentage rate disclosed under § 1026.38(o)(4) becomes inaccurate, as defined in § 1026.22.

(B) The loan product is changed, causing the information disclosed under § 1026.38(a)(5)(iii) to become inaccurate.

(C) A prepayment penalty is added, causing the statement regarding a prepayment penalty required under § 1026.38(b) to become inaccurate.
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#2145739 - 09/12/17 08:55 PM Re: **Discount Fees and redisclosures - HELP!** BBoyd
BBoyd Offline
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BBoyd
Joined: Mar 2002
Posts: 2,494
MI
In regards to the loan estimate instead of the closing disclosure, would a revised LE have to be issued with a new waiting period if the borrower wants to use excess seller concessions to purchase discount points? I can see where there would have to be a revised CD in this case to properly represent the APR, but for the LE would that be the case? The CD has not yet been issued. It is borrower initiated, so we believe we have the valid change in circumstance for a revised LE, but we aren’t sure if we actually need to issue it. The origination fees will go up due to the discount points, the APR will go down, the cash at closing will not go up since the seller credits will be paying for the requested discount points. The CFPB has made it clear that the fees need to be disclosed under the borrower regardless of who pays for it.

Thanks!
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#2145746 - 09/12/17 09:13 PM Re: **Discount Fees and redisclosures - HELP!** BBoyd
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,880
Galveston, TX
If you want to close the loan on Friday, the borrowers have to receive the CD today. Yes, you can make the change on the initial CD as it is within four business days of closing and document your changed circumstance. There is no comparison or APRs between LEs or the LE and initial CD.
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