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#2223506 - 10/10/19 03:35 PM Recast - LE/CD?
mdog76 Offline
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I'm thinking so, but if we change the interest rate and the payment changes due to significant principle reduction, do we need to provide an LE and CD?
Last edited by mdog76; 10/10/19 03:38 PM.
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TRID - TILA/RESPA Integrated Disclosures Rule
#2223511 - 10/10/19 03:56 PM Re: Recast - LE/CD? mdog76
rlcarey Offline
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You mean you are modifying the loan?? If you aren't adding or changing a variable rate feature it is not a refinance under Reg Z.
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#2223513 - 10/10/19 04:03 PM Re: Recast - LE/CD? mdog76
mdog76 Offline
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Yes, modifying the loan that lowers the rate and payment.
Last edited by mdog76; 10/10/19 04:04 PM.
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#2224076 - 10/21/19 07:44 PM Re: Recast - LE/CD? mdog76
mdog76 Offline
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I'm going to add to this thread instead of making a new one. Same situation as above, modifying loan to lower the rate. Only change is this time the original loan was before TRID and for a second home. This residence has now become the Primary Residence. Just making sure no TRID would be needed since its now Primary Residence.

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#2224103 - 10/22/19 12:58 PM Re: Recast - LE/CD? mdog76
Adam Witmer Offline
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You haven't satisfied and replaced the existing obligation (since this is a modification) and you aren't changing or adding a variable rate feature, so this still would not be a refinance under 1026.20(a).
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#2224197 - 10/23/19 12:31 PM Re: Recast - LE/CD? mdog76
mdog76 Offline
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Last questions about this: What about APR disclosure? Should we be disclosing that to the customer at some point during the modification? If the original loan was a 5/1 ARM and they want to change to a 7/1 ARM, does change the scenario any?
Last edited by mdog76; 10/23/19 12:43 PM.
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#2224198 - 10/23/19 01:05 PM Re: Recast - LE/CD? mdog76
Dan Persfull Offline
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A modification is not subject to re-disclosure therefore you would not need to disclose a new APR, barring any state law requirement.


If the original loan was a 5/1 ARM and they want to change to a 7/1 ARM, does change the scenario any?

Modifying a 5/1 ARM to a 7/1 ARM would be adding a variable rate feature not previously disclosed and therefore would be a refinancing requiring all new disclosures.
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#2224210 - 10/23/19 02:14 PM Re: Recast - LE/CD? mdog76
mdog76 Offline
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Ok, so I've doing some digging and we have one where we went from 5/1 to 7/1 and didn't do TRID. We are within our 30 day window. Do we correct by issuing an LE/CD to the customer post closing to show we corrected once discovered?

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#2224211 - 10/23/19 02:30 PM Re: Recast - LE/CD? mdog76
Truffle Royale Offline

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imho, you cannot go back and unring the bell. You did it wrong and that loan stands as it is. And because you did it wrong, there is no 30 day window. I would train and document that the training was done because you found the error.

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#2224226 - 10/23/19 03:45 PM Re: Recast - LE/CD? mdog76
John Burnett Online
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Originally Posted by mdog76
Ok, so I've doing some digging and we have one where we went from 5/1 to 7/1 and didn't do TRID. We are within our 30 day window. Do we correct by issuing an LE/CD to the customer post closing to show we corrected once discovered?


That horse is out of the barn. You can't put it back. Target the lending officer that left the barn door open by training him or her concerning the rules on refinancings in Reg Z ยง1026.20(a).
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#2224359 - 10/24/19 07:08 PM Re: Recast - LE/CD? mdog76
mdog76 Offline
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I just love how loan officers will not give you all of the info you need at the time they want a question answered. If we recast, but the original borrower is leaving the loan and daughter is taking over the loan and payments, would that require any TRID disclosures or same rules of refinance apply? I'm sorry for all the questions about this but I'm getting bits and parts at a time!! This is separate from the 5/1-7/1 issue as well.
Last edited by mdog76; 10/24/19 07:09 PM.
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#2224368 - 10/24/19 08:14 PM Re: Recast - LE/CD? mdog76
Dan Persfull Offline
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Would you please clarify what the term "recast" means to you?
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#2224374 - 10/24/19 08:20 PM Re: Recast - LE/CD? mdog76
mdog76 Offline
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I've understood recast to mean we are redoing the loan but not changing any material terms that wouldn't require new disclosure. Am I misunderstanding or misusing the term?
Last edited by mdog76; 10/24/19 08:20 PM.
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#2224377 - 10/24/19 08:33 PM Re: Recast - LE/CD? mdog76
Dan Persfull Offline
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Bloomington, IN
No, I just wanted to be sure I understood your line of thinking.

the original borrower is leaving the loan and daughter is taking over the loan and payments

This sounds like the daughter is assuming the loan. Depending on the circumstances the transaction may be subject to new disclosures. Review 1026.20(b).

https://www.bankersonline.com/regulations/12-1026-020#20b

Editor's Note:
On May 1, 2019, the CFPB issued a Fact Sheet, "Are Loan Estimates and Closing Disclosures Required for Assumptions?" Specifically, the Factsheet addresses whether a Loan Estimate and Closing Disclosure are required under the TILA-RESPA Integrated Disclosure Rule (TRID Rule) for a specific group of transactions. It addresses whether these disclosures are required for a transaction: (1) in which a new consumer is being added or substituted as an obligor on an existing consumer credit transaction; (2) that is a closed-end consumer credit transaction secured by real property or a cooperative unit; and (3) that is not a reverse mortgage subject to 12 CFR 1026.33. The Factsheet can be found on the CFPB's Compliance and Guidance page for TILA-RESPA Integrated Disclosures.
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