Hello - I just wanted to confirm that there was no mention of APR decrease in the amendments to TRID, right? Meaning, if the APR from the initial CloD to the final CloD decreases by more than the tolerance, then we still have to issue a revised/corrected CloD and apply the 3 day timing again before consummation...right?

For some reason I was thinking the amendments released us from that 3 day timing requirement when it's decreasing, but I can't find anything to support my 'crazy' thought.

Thanks in advance for any confirmation!

I've never applied a wait on a decrease. But I do believe some of the amendments emphasized that it is not required. You can probably do a search on here and find discussions...I'm quite sure I've seen some.

I searched and found discussions from 2015, 2016, etc. but none for the amendments that are mandatory in October 2018.

There's that caveat that's existed for years about if it results from the disclosed finance charge, etc. then it's considered accurate (maybe that's the exemption you've used before), but generally it's required to be redisclosed if it decreases by more than the tolerance (same as if it increases by more than the tolerance).

Nothing has changed in TRID from the old MDIA days. If the APR is over disclosed and that over disclosure is directly related to the over disclosure of the finance charge on the initial CD, then a decrease in the APR and corresponding decrease in the finance charge on the final CD does not trigger a violation under 1026.22(a)(4) and 1026.38(o)(2).

Randy, is there anything in section 109 of EGRRCPA ("No Wait for Lower Mortgage Rates") that isn't already covered by the current rule on decreases? Or was it passed by Congress in ignorance of the current rules?

Congress in ignorance?

Really John

Just as a follow-up - it all revolves around the same rules as those that applied under MDIA. The Fed published a great article on this in 2011: https://consumercomplianceoutlook.org/2011/first-quarter/mortgage-disclosure-improvement-act/

The most important statement in this article is: "An overstated APR that corresponds directly with an overstated finance charge is within tolerance and redisclosure is not required."

With today's automated systems, I am at a loss as to how you can possibly have an overstated APR on an initial CD that would not be directly correlated with an overstated finance charge on the same disclosure. If it involved a product change which also involves a change in the amortization period of the loan after the initial CD was issued. it might be possible. However, a product change is already an automatic three business day wait under TRID.

If someone can provide an example, I would like to hear about it.

The part about the correspondence with an overstated finance charge is definitely not my strong suit and we have really just went ahead and given the new wait period...it doesn't happen much for us because we are generally not making changes to our loan late in the game, but it has happened a handful of times.

I'm trying to think of the examples we have had...I'm thinking it might be a decrease in loan amount due to appraised value not being as high as expected, and since our origination fees are generally based off of loan amount then that affects things. Or on the flip side, an appraisal being higher than expected which makes the customer's LTV lower than expected, which will generally put them in a lower rate, affecting the APR.

Would those be related to an overstated finance charge?

A lower interest rate would have an effective of a lower finance charge which corresponds to a lower APR.

A lower loan amount and lower origination fee - I am unsure exactly how that would create a tolerance issue - we would need an example.

It seems reasonable to say that it wold be VERY RARE that a reduction in APR would make the former APR inaccurate given Randy's explanation and trigger the need for a new waiting period. An upward change in APR after the Closing Disclosure is issued has a greater likelihood of making the disclosed APR inaccurate and triggering a new wait.

An FRB honcho said it like this to me once: I've seen it once...and it was because the LO had 'guessed' at an APR for the early disclosure [way back when things were not so automated] and then calculated correctly for closing.

Moral of that story, it wasn't based on an 'error'. It was based on a WAG.