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#2232919 - 03/13/20 02:40 PM remove coborrower
laf0915 Offline
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Joined: May 2006
Posts: 232
We have a secondary market refinance application which was a joint application. When credit was run, co-borrower's credit score caused the rate to be higher. Applicant requested that co-borrower be dropped from the loan in order to get a better rate. Any advise on documenting this? Is it a changed circumstance that would require an updated LE? Or since it won't affect the fees, do we just document it with a memo and move on with the application without the co=borrower? Any compliance issues we need to worry about?

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Lending Compliance
#2232921 - 03/13/20 02:44 PM Re: remove coborrower laf0915
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 78,960
Galveston, TX
How you handle will be up to the investor.
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#2232922 - 03/13/20 02:49 PM Re: remove coborrower laf0915
laf0915 Offline
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Joined: May 2006
Posts: 232
Thanks rlcarey. We contacted our investor and they said it up to whatever is required by CFPB.

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#2232925 - 03/13/20 02:59 PM Re: remove coborrower laf0915
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 78,960
Galveston, TX
The CFPB does not address it, but if the applicants modified their application, I am not sure why you can't just move forward. If the applicants applied for a specific interest rate however, you owe the co-borrower an AAN.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2232982 - 03/14/20 03:38 PM Re: remove coborrower laf0915
Truffle Royale Offline

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Joined: Jul 2003
Posts: 17,341
fyi, per TRID, you don't HAVE to do a new LE when you drop a borrower, or any other time except a signed written rate lock.
Just make sure your file is well documented. That goes whether the loan is locked with secondary or not.

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#2260249 - 09/24/21 08:41 PM Re: remove coborrower laf0915
Tarhe Offline
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Joined: Nov 2006
Posts: 1,240
California
Just to clarify, if we have an applicant for a mortgage loan request that we drop a co-applicant (we're at the preapproval stage), but it is NOT related to better pricing, would we owe an AAN? On the other hand, if we drop the co-applicant (borrower's request) because of poor credit (but not related to better pricing), would we owe an AAN?

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#2260253 - 09/24/21 08:50 PM Re: remove coborrower laf0915
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 78,960
Galveston, TX
What do you mean "we drop". How can the lender drop an applicant from a loan application?
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2260256 - 09/24/21 09:01 PM Re: remove coborrower laf0915
Tarhe Offline
Diamond Poster
Joined: Nov 2006
Posts: 1,240
California
It was the borrower's request that we remove the co-applicant. Just trying to determine when (other than your pricing example), we would owe an AAN when a co-applicant is removed.

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#2260259 - 09/24/21 09:03 PM Re: remove coborrower laf0915
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 78,960
Galveston, TX
When you tell the applicants that we will not make you a loan, but if applicant #1 applied by themselves, we would.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#2260261 - 09/24/21 09:06 PM Re: remove coborrower laf0915
Tarhe Offline
Diamond Poster
Joined: Nov 2006
Posts: 1,240
California
Thank you!

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