if the loan is already locked but thereafter the credit score dropped due to reasons, can we just issue a COC/CD for the pricing adjustment or do we need to send a loan estimate out??

what's a COC/CD?

If you've delivered a CD, you cannot back track to deliver an LE.

I hope the 'reasons' are really good ones and the fact that you're finding out AFTER you deliver the CD really good too.
Around here, we pull the soft cbr prior to delivering the CD. Then if anything is there we know and can follow proper channels of LE for changed circumstance.

if the loan is already locked but thereafter the credit score dropped due to reasons, ......

Since you have a signed lock agreement with your customer, I hope you lock agreement addresses this.

I agree with Randy. Unless your lock agreement specifically addresses this issue, which is very doubtful, you have no basis to increase the rate or rate related fees to the consumer.

The rate lock agreement I see used most contains the following language:
"This agreement guarantees only the items shown above. Other closing costs and terms may be subject to change."

The 'items shown above' are the loan amount, interest rate, loan type, number of days locked.

I guess I am sort of confused. You can lock the rate and then at anytime require the consumer to pay points to maintain that rate at a later date based on whatever criteria you want too?? I'm not sure how that actually works.

If they don't qualify for the loan as applied for, I think you would have to either make them a counter-offer or deny the loan.

Truffle- the question was before the CD gets issued to the borrower.
Randy-We have the recorded conversation with the borrower regarding the situation in which the credit score dropped, therefore a pricing adjustment occurred. It was that or canceling the loan. The borrower accepted the new terms.
So, last night we sent the change of circumstances along with the closing disclosure detailing it.

While I can see where you're coming from, the only term that has ever been changed is the rate expiration date and the extension fee cost directly associated. While it may not be the best wording, it was only shared in response to your statement about addressing the issue in the original rate lock agreement.

Mike answered the question. The loan was denied due to a change in the borrower's financial condition and they made a counter-offer. The borrower accepted the counter-offer and thus they have a valid changed circumstance. If they are within four business days of closing, that change of circumstance can be documented and the initial CD issued to reset tolerance baselines.

thanks guys for your help! Unfortunately, we don't have a compliance officer or an attorney in house. The forum, especially you Randy, Dan, and Truffle have been a tremendous help for me. Again thank you guys!