Thread Options
#2080686 - 05/26/16 06:05 PM Adding Mortgage Insurance
terpsfan Offline
Diamond Poster
Joined: Feb 2007
Posts: 1,894
Can we add a monthly mortgage insurance payment after the LE is provided without a change circumstance? This was left out in error but since they is not in the closing cost section there is no tolerance correct?

Return to Top
TRID - TILA/RESPA Integrated Disclosures Rule
#2080820 - 05/27/16 01:46 PM Re: Adding Mortgage Insurance terpsfan
Tracey, CRCM Offline
Platinum Poster
Joined: Jul 2015
Posts: 542
Gorham, ME
We have had this happen 2x and after discussion with our legal counsel and audit firm, we were told no, that we cannot add it due to bank error. We had to obtain lender paid MI on both loans.
_________________________
Tracey

Return to Top
#2080844 - 05/27/16 02:31 PM Re: Adding Mortgage Insurance terpsfan
Truffle Royale Offline

10K Club
Joined: Jul 2003
Posts: 17,266
You've gotten your answer from better sources than me and fwiw, I agree.
Bank error is never a valid CC.
The only valid CC for adding PMI is having the LTV change due to something like appraisal value comes in lower.
But knowing PMI is needed from the start and forgetting to put it on the LE means the bank is buying.

Return to Top
#2080856 - 05/27/16 03:13 PM Re: Adding Mortgage Insurance terpsfan
justsayjulie Offline
Gold Star
Joined: Mar 2014
Posts: 293
back home again
Agree with both Tracey and Truffle...
_________________________
Deep breath in...cleansing breath out...

Return to Top
#2080906 - 05/27/16 04:52 PM Re: Adding Mortgage Insurance terpsfan
Docs Offline
100 Club
Joined: May 2016
Posts: 241
Not sure if I agree.

In order to issue a revised LE there needs to be a CIC, and in this case the error is not a CIC, so a revised LE cannot or should not be issued. But assuming there is no fee tolerance issues, what prevents the lender from issuing their CD disclosing the PMI and closing the loan accordingly? Document the error in the file and make sure it does not happen again, and UDAP should not be an issue, either. What am I missing?
_________________________
Just my opinion, I could be wrong. - Dennis Miller

Return to Top
#2080917 - 05/27/16 05:11 PM Re: Adding Mortgage Insurance terpsfan
Truffle Royale Offline

10K Club
Joined: Jul 2003
Posts: 17,266
TRID is all about bank transparency and what's best for the borrower.
You're adding a charge.
The bank made an error.
How do these two things add up to it's ok to make the borrower pay when they have no advance notice?
I'm going to take the hit and document and train.

Return to Top
#2080966 - 05/27/16 06:53 PM Re: Adding Mortgage Insurance terpsfan
Docs Offline
100 Club
Joined: May 2016
Posts: 241
My point was that I am not aware of any provision in the TRID rule that would prohibit making the correction (adding PMI) on the CD and closing the loan accordingly. The borrower would have a minimum of 3 days advance notice between the time they receive the CD and closing to ask questions and decide if they wish to proceed. I agree that is not the best approach from a customer service standpoint, and could clearly lead to UDAP issues if it happened much more than once. Or are there specific requirements in TRID that I am overlooking? For example, if I was asked by bank management to point to the TRID rule that prohibits correcting the error on the CD I would draw a blank, other than the generalized statements Truffle noted above, which certainly have merit.
_________________________
Just my opinion, I could be wrong. - Dennis Miller

Return to Top
#2080999 - 05/27/16 07:39 PM Re: Adding Mortgage Insurance terpsfan
terpsfan Offline
Diamond Poster
Joined: Feb 2007
Posts: 1,894
That is where I am at. I am not sure what to point to for why we can not add it since it is not a tolerance item. If the monthly charge was just underestimated since it is not a tolerance item can it increase?
Last edited by terpsfan; 05/27/16 07:43 PM.
Return to Top
#2081028 - 05/27/16 09:30 PM Re: Adding Mortgage Insurance terpsfan
justsayjulie Offline
Gold Star
Joined: Mar 2014
Posts: 293
back home again
_________________________
Deep breath in...cleansing breath out...

Return to Top
#2081035 - 05/28/16 01:20 AM Re: Adding Mortgage Insurance terpsfan
Truffle Royale Offline

10K Club
Joined: Jul 2003
Posts: 17,266
The thread julie linked is on point.
terpsfan, my advice is to stop focusing on whether something is a tolerance item or not. That simply has no bearing and is only serving to cloud the issue for you.
Bottom line is the bank screwed up and they must pay the price because a bank error is never a valid cc.

Return to Top
#2081068 - 05/31/16 12:58 PM Re: Adding Mortgage Insurance terpsfan
terpsfan Offline
Diamond Poster
Joined: Feb 2007
Posts: 1,894
I agree it is not a change circumstance but since the monthly payment amounts are not tolerance items does there need to be a changed circumstance to be different on the closing disclosure. What can I point to when trying to make the bank eat this cost?

Return to Top
#2081133 - 05/31/16 05:31 PM Re: Adding Mortgage Insurance terpsfan
Luv2run Offline
Gold Star
Joined: Jan 2015
Posts: 445
Let's look at it in another light, suppose the property is a condo, and your lender fails to disclose the HOA fees on the projected payments table. Is the bank then on the hook to pay the condo HOA fees monthly for this borrower? For the life of the loan? While I agree that this type of error is not in the "spirit of the reg", is it necessary for the bank to absorb this cost?
_________________________
If at first you do succeed....try something harder
-fortune cookie

Return to Top
#2081159 - 05/31/16 06:58 PM Re: Adding Mortgage Insurance terpsfan
Truffle Royale Offline

10K Club
Joined: Jul 2003
Posts: 17,266
HOA fees are not a condition of getting the loan in the same manner that pmi is.
imho, it's cleaner for the bank to pay for their mistake on this loan rather than split hairs.
As much as I cannot give you regulatory support for my take on this, neither can you give me support for yours.
Which means if an examiner pulls this, I'm at a loss to defend my position of adding it on for the borrower.
And the bottom line is, the bank made an error.

Return to Top
#2184150 - 07/05/18 03:23 PM Re: Adding Mortgage Insurance terpsfan
Kompliance Offline
Junior Member
Joined: Aug 2012
Posts: 44
Pennsylvania
I'm bringing this topic up again, because I am only finding guidance on if this was left out in bank error, not for legitimate circumstances.
We have a situation where we have a cash out refinance and it was disclosed with no PMI because the estimated appraised value at application made the LTV below the limits for required PMI. After the LE was issued, the certified appraisal came back lower, causing the LTV to increase above the threshold and require PMI. Because insurance is an unlimited tolerance item, we added to their CD and did not re-disclose the LE. Am I missing something??

Return to Top
#2184255 - 07/06/18 09:59 AM Re: Adding Mortgage Insurance terpsfan
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 76,360
Galveston, TX
Nope.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2184415 - 07/06/18 08:06 PM Re: Adding Mortgage Insurance terpsfan
Kompliance Offline
Junior Member
Joined: Aug 2012
Posts: 44
Pennsylvania
Thank you, rlcarey. Sometimes I think I spend too much time overthinking these things smile

Return to Top