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#2225202 - 11/06/19 07:35 PM Stupid Question-Change Circumstance and timing
LostinRegLand Offline
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When would you start the clock ticking for a borrower requested change?

For example on Monday the borrowers request to increase their loan amount. This will affect several fees on page 2. The lender would like to be able to increase the tolerance baseline and issue a change circumstance Loan Estimate. When does the 3 day clock start ticking?

A. From Monday-the day the borrowers requested the increase in the loan amount
B. from the date the increase was approved by underwriting which for the sake of this example we will say was on Tuesday of the following week

We have a debate as to the correct time to start the change circumstance LE clock ticking.
The general rule is no later than 3 business days after receiving information sufficient to establish that the change reason occurred. This is the hang up in the debate when is that established? Upon the borrowers request or upon the request being approved.......

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#2225216 - 11/06/19 10:00 PM Re: Stupid Question-Change Circumstance and timing LostinRegLand
Diane Dean Offline
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Your clock should start with the borrower's request (A). The borrower-requested change is your changed circumstance in this case, so your clock should start when you're aware of the request, not when you've approved the request.
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#2225217 - 11/06/19 10:12 PM Re: Stupid Question-Change Circumstance and timing LostinRegLand
LostinRegLand Offline
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Thank you.

Still hoping for others responses and don't want to sway any response but A is what I have suggested be implemented based on my reading and comprehension of the regulation but management does not see it that way. They do not believe that the change reason has occurred until approved. My stance has been that the Loan Estimate is an ESTIMATE. It is meant to show the cost based on a customers request not the cost based on the loan approval. I go back to then why give out an LE at all as it is also based on a customer request if fees are only "good" once the loan request is approved.

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#2225218 - 11/06/19 10:25 PM Re: Stupid Question-Change Circumstance and timing LostinRegLand
burke116 Offline
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Loan Estimates are issued based on a consumer's application, not the bank's approval of such application. A subsequent LE in this situation is based on the applicant's request to amend the application, not the bank's approval of such an amendment.

(C) Revisions requested by the consumer. The consumer requests revisions to the credit terms or the settlement that cause an estimated charge to increase.

(4) Provision and receipt of revised disclosures.
(i) General rule. Subject to the requirements of paragraph (e)(4)(ii) of this section, if a creditor uses a revised estimate pursuant to paragraph (e)(3)(iv) of this section for the purpose of determining good faith under paragraphs (e)(3)(i) and (ii) of this section, the creditor shall provide a revised version of the disclosures required under paragraph (e)(1)(i) of this section or the disclosures required under paragraph (f)(1)(i) of this section (including any corrected disclosures provided under paragraph (f)(2)(i) or (ii) of this section) reflecting the revised estimate within three business days of receiving information sufficient to establish that one of the reasons for revision provided under paragraphs (e)(3)(iv)(A) through (F) of this section applies.


The information that the bank receives to establish a changed circumstance is the consumer's request, not request and subsequent approval of such a request.

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#2225219 - 11/06/19 10:28 PM Re: Stupid Question-Change Circumstance and timing LostinRegLand
raitchjay Online
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How can anyone but the borrower drive a "borrower requested change"? Lender action (or inaction) never drives the timing of a valid changed circumstance. If it was meant to be what your management wants it to be, it would have been labelled a "borrower requested change approved by underwriting". IMHO.

Giving out a revised LE is no more a commitment to lend than the initial LE. As i see it, either have a process that gets underwriting to look at it in a timely manner so that the revised LE can go out after approval (since that's what your management seems to want) or just get the revised LE out and, if underwriting figures out that the property won't support the larger loan amount, deny (and counteroffer, if desired) back to an amount that it will support. But i don't believe that an interpretation that the valid changed circumstance hasn't happened until underwriting approves it holds water.
Last edited by raitchjay; 11/06/19 10:35 PM.
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#2225223 - 11/07/19 12:59 AM Re: Stupid Question-Change Circumstance and timing LostinRegLand
LostinRegLand Offline
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Thank you all. Sometimes when I get so much push back I start doubting my ability to understand these regulations when I am constantly being told by management that I am miss reading them. Sigh onto another fire.

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#2225247 - 11/07/19 03:51 PM Re: Stupid Question-Change Circumstance and timing LostinRegLand
Truffle Royale Offline

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Late to the party but if ^^^ I were in that situation, I'd be looking for another job. Compliance doesn't work without management backing. I'd be worried that if things go south in an exam, I'd be out a job becuase that kind of management would point the finger at me. Not to say sometimes management won't decide to take the risk and override a decision. That's not the same as being constantly told you're misreading Regs.

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#2225253 - 11/07/19 04:36 PM Re: Stupid Question-Change Circumstance and timing LostinRegLand
Mountaineers_Fan Offline
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Also late to the party, but your answer is A. The clock starts when the bank receives the information. That would be when the borrower told the lender that they'd like to up their loan amount. Otherwise the 3 day clock would serve no purpose.

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#2226150 - 11/22/19 04:04 AM Re: Stupid Question-Change Circumstance and timing LostinRegLand
Hawk Offline
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You can go by the date the change is made as there's really no way to record when the request was made. Unless there's record of it. An auditor cant know when the borrower or even the broker requested it as that could have been done verbally.

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#2226155 - 11/22/19 05:03 AM Re: Stupid Question-Change Circumstance and timing LostinRegLand
Truffle Royale Offline

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No you cannot go by when the change is made. That totally flies in the face of having to react to a changed circumstance which is driven by either a borrower request or a specific incident. It definitely is NOT when the bank reacts to the CC and makes the change.

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#2226157 - 11/22/19 12:54 PM Re: Stupid Question-Change Circumstance and timing LostinRegLand
Adam Witmer Offline
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Truffle is (and others are) correct that the 3 day clock starts with the borrower's request, not when the bank gets around to making the change. Keep in mind that a revised LE is only required for this change IF you want to increase your fees (which was the OP). If management doesn't want to have a process where underwriting can be done within the 3 business days after receiving the information from the borrower, their option is that they could always choose to just eat any applicable fees. If they want to increase fees due to the changed circumstance, then they need to issue a revised disclosure within 3 business days after receiving the information from the borrower. Those are the two options and anything else would be a problem.
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#2226234 - 11/23/19 07:15 PM Re: Stupid Question-Change Circumstance and timing LostinRegLand
Hawk Offline
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You can definitely go by the time the change is made. If there is no record of when the change was requested, there is nothing to audit it against. And the change being made is the actual change of circumstance, not the request.

It all depends on the details of the change . Some stuff is different. But for the most part we go by when the change is actually made in regards to say loan amount changing.

I broker wants to change the loan amount and requests it on Monday. Underwiter attempts to make the change but program doesn't allow it, so they go back and forth and 4 days later they restructure the loan and the loan amount change originally requested gets made.... what day do you go by? lol

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#2226235 - 11/24/19 09:22 AM Re: Stupid Question-Change Circumstance and timing LostinRegLand
rlcarey Online
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"broker wants to change the loan amount and requests it on Monday."

The change happened on Monday. Whether or not you can approve or move forward with the loan for the requested new amount is irrelevant. No different than an original application unless you deny the loan within three business days of the original application or the requested change. You would need to disclose by Thursday and if determined later that you cannot do the loan at the requested amount, you deny or present a counter-offer.
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#2226248 - 11/25/19 12:40 PM Re: Stupid Question-Change Circumstance and timing Hawk
Adam Witmer Offline
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Originally Posted by Hawk
You can definitely go by the time the change is made. If there is no record of when the change was requested, there is nothing to audit it against.

While I understand what you are saying about auditors probably not being able to detect the violation, it doesn't make it right just because there is nothing to audit. From my experience, it is only a matter of time before a stray email ends up in the file evidencing the actual time of request and then the systematic violation gets discovered. The best practice in this case is to have a process where your employees record the day of request so there is no question as to when the request came in.
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#2226252 - 11/25/19 02:47 PM Re: Stupid Question-Change Circumstance and timing LostinRegLand
John Burnett Offline
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Auditors checking whether you have met a timing deadline will be looking for the "triggering" event so they can count the days. When there is no documentation of the triggering event, a competent auditor will ask for it and mention its absence if you can't produce it. They won't assume that you met the deadline without something, even if it's only an annotation in the file.
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#2226256 - 11/25/19 03:08 PM Re: Stupid Question-Change Circumstance and timing Hawk
Truffle Royale Offline

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Originally Posted by Hawk
I broker wants to change the loan amount and requests it on Monday. Underwiter attempts to make the change but program doesn't allow it, so they go back and forth and 4 days later they restructure the loan and the loan amount change originally requested gets made.... what day do you go by? lol


Others have already spoken to the rest of your post being wrong but I can't let this stand either in case some future reader thinks this part is correct because it is not.
"A broker wants to change the loan amount" is NOT a valid changed circumstance ever. Period.
With regard to change in loan amount, the applicant is the only one who can trigger a valid changed circumstance either by directly requesting the change or accepting a counter-offer that includes changing the loan amount.

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#2226365 - 11/26/19 08:17 PM Re: Stupid Question-Change Circumstance and timing LostinRegLand
John Burnett Offline
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As for management's argument in this scenario, it certainly appears "they" are trying to justify a delay that would not permit the bank to adjust the increased cost for purposes of tolerance calculations.
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#2226400 - 11/27/19 12:55 AM Re: Stupid Question-Change Circumstance and timing LostinRegLand
Darth HMDA, CRCM, CAMS Offline
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agree with all the others. Your institution will have some serious remediation in the future if they follow this path. I would CYA very, very explicitly and carefully in board and management reports. As John said, an auditor will absolutely look for this. If their half competent at their job they'll find it.
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