Good morning - long time lurker, first time poster! This is going to seem like an elementary question but I can't seem to find what I need. What if the LE wasn't delivered on time? Or at all (meaning they just "withdrew the file because they were out of compliance)? I thought I remembered there being something out there that basically said the lender was responsible for the fees. Did I dream that up?

Happy Friday!

Well, if you have a one-off late LE, then you have a violation for missing the timing requirement. There is no cure for that.

If you have a pattern or practice of doing it or you are playing games with consumer applications to avoid violations, then you are going to throw yourself at the mercy of the regulators.

Thank you! I do believe its a one off but I was hoping to provide some sort of "fear" into them with what could happen (the regulators info is fearful to me but probably not them).

If by 'out of compliance' you mean the borrower/loan would have been denied, then it can't be 'withdrawn' and you owe them a denial notice too.

Or at all (meaning they just "withdrew the file because they were out of compliance)?

Well, that is just plainly a fraudulent act which potentially damages the customer. Tell them fraudulent acts by a loan officer triggers a SAR, which will trigger an investigation, which may lead to dismissal, and a lifetime ban from banking once the regulators are through with them.

A LO can't 'withdraw' a file under any circumstances. Only an applicant can do that. But as Randy said, if the LO 'dismissed' the file because they messed up and didn't deliver earlies, then they have violated many rules, and as he said...could be subject to further investigation and reporting of their actions.

Not the original intent of this thread, but under the SAR confidentiality rules, could you tell the LO you'd filed a SAR on them if it got to that point? I know that's not what you meant in your post, but just curious about if it actually got bad enough that you had to file.

I meant it in the general sense in response to "I was hoping to provide some sort of "fear" into them with what could happen".

And of course, you could not inform the lender that you had filed a SAR on their actions. You would instead focus on what he or she did that was wrong and either take remedial action (retraining) or some form of employment action (probation, termination).

Back in pre-TRID days under the HUD RESPA rules, HUD at one time said that a complete failure to provide the HUD Good Faith Estimate (GFE) would result in a no-closing cost loan. The Bureau has not taken such a bold step and has not, to my knowledge said what the result would or should be. That leaves it up to your federal regulator, and I think that Randy's first response is correct.

And welcome, Krit, to our Discussion Forums.

Tagging on to this thread - assuming that this is not a pattern but the 3-day timeframe was just missed for some reason. We did send the full LE package with the settlement service provider list and the borrower ends up not selecting someone from that list.

I know we need to cover any costs in Section A & B because they were not shoppable and zero tolerance. Section E (gov't fees) would be 10% tolerance and we would cover 90% of those fees.

What happens to the Section C, attorney costs, where (late but given) the borrower did not select from our list? Are they still unlimited tolerance along with the prepaid interest, escrow setup costs and Section H?

If you are choosing to cure because your LE package was delivered late - well you can do what ever you want to, as there is no regulatory requirement to cure. If you failed to deliver the LE at all, then all comparison estimates would be zero and you would cure for all closing costs, regardless of the category, as they would all fall under 1026.19(e)(3)(i) due to the lack of good faith. Even the old RESPA round-up did not specify curing for a late GFE, only the total failure to deliver one.

Not quite. The recording fees in that section are, by rule, part of the 10% tolerance group. Any transfer taxes or other government fees are 0% tolerance costs. And where does your "we would cover 90% of those fees" statement come from?

Question on this - so, are you saying that we could choose not to cure at all, if only sent late? Or are you saying that we are okay not to choose to cure the Section C costs and other unlimited tolerance items?

John, you are correct. We would treat transfer and other gov't taxes as zero tolerance.

We have had isolated cases of late LE's in the last few years, and we don't give free loans as a result.

So, we usually send out over 1,000 LE's a year and maybe have 2-3 that somehow miss the cutoff. Usually due to mis-identifying the loan as an agricultural loan instead of consumer loan on the loan officer part. (We originate both kinds of loans.) So, if this is not a pattern or practice of violating this rule, and we send out our LE as soon as we are able, it is still a violation under the rule but we would not have to have tolerance cures? This is new to me. I guess I was being too conservative?

Technically, you're correct. But the fact that you have loan officers who can't reliably distinguish consumer from ag loans (and I don't mean to suggest that's always an easy call) could make an examiner feel that lenders need more training on the nuances of that decision. If no one is addressing that sort of attack on the problem, the bank's compliance program could be downgraded in an exam.

I think the "no-cost loan for late disclosures" argument was mostly used by Compliance Departments to scare LOs into TRID compliance. I don't think the reg requires it.

We train quite a bit and work closely with our loan officers to be able to distinguish tricky situations. We have also taken steps on the agricultural side to watch of these as well. Unfortunately, in a rare case, one slips through. I appreciate the feedback. I will continue to monitor closely but it is nice to know that we don't have to give free loans because of a rare mistake.

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It's a carry - over from the GFE guidance which suggested it would be a free loan, even for late [maybe in excess of a day or two . Post TRID it became a "judgement call" and yes, a scare tactic rarely used anymore, in my experience.