Learn More - Click Here!

New Reply Thread Options
#2260103 - 09/22/21 09:07 PM TRID permissible purpose?
Anonymous
Unregistered

I am curious to know what others think of this scenario.

We have implemented a new process surrounding mortgage applications and Loan Estimate delivery. The customer fills out an application on our bank website and after submitting will receive an automatically generated LE based on details in the application. We originate primarily fixed rate loans that are sold to a secondary market investor that charges LLPAs when the loan is a cash-out refinance.

In the particular instance I am writing about, the customer selected a loan purpose of "refinance" when "refinance with cash out" should have been selected. The LE generates and shows $40,000 of cash back, which to me indicates cash-out refinance regardless of what loan purpose box you check. The problem is the LE that automatically generates does not include cash-out LLPAs when refinance is selected, even if the transaction is actually a cash-out.

Lenders are arguing that this is customer error and should be a permissible purpose to revise the LE. Part of me thinks that we are asking too much of our customers to know the difference about how one purpose vs another impacts loan pricing, and ultimately a LE that shows $40,000 cash back but doesn't contain the appropriate cash-out LLPAs is a bank problem that needs to be cured.

Hoping for some thoughts from others on this one. I have a feeling it will be a common issue.

Return to Top Reply Quote Quick Reply Quick Quote
#2260104 - 09/22/21 09:16 PM Re: TRID permissible purpose? Anonymous
raitchjay Offline
Power Poster
Joined: Oct 2009
Posts: 8,564
OK
My first and only thought really is that i wouldn't get behind any process that includes "automatically generated LE's". We don't sell on the secondary market nor deal with LLPA's, so perhaps my world is so much different from yours that my 2 cents won't be very helpful to you.....but i just would feel totally uncomfortable with the process you are talking about.
_________________________
I'm fixin' to fix that.

Return to Top Reply Quote Quick Reply Quick Quote
#2260106 - 09/22/21 09:19 PM Re: TRID permissible purpose? Anonymous
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 77,247
Galveston, TX
FWIW - I vote: ultimately a LE that shows $40,000 cash back but doesn't contain the appropriate cash-out LLPAs is a bank problem that needs to be cured.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top Reply Quote Quick Reply Quick Quote
#2260109 - 09/22/21 09:22 PM Re: TRID permissible purpose? Anonymous
raitchjay Offline
Power Poster
Joined: Oct 2009
Posts: 8,564
OK
After re-reading (and reading Randy's post)....i just want to add--i don't think it's so much the "automatically generataed LE" part as the assumption i have (correct me if wrong), but it reads as if LE's just get generated and mailed or sent out the door without any human review....that's the part that i wouldn't be comfortable with.
_________________________
I'm fixin' to fix that.

Return to Top Reply Quote Quick Reply Quick Quote
#2260110 - 09/22/21 09:24 PM Re: TRID permissible purpose? raitchjay
Anonymous
Unregistered

I am very uncomfortable with this process but it was not my decision to make. I am hoping that I can use feedback here to send a message that we may need to revisit this choice.

I legitimately don't know if I should consider this a permissible changed circumstance. Very curious to see if some people can offer a thought. Even if I can address this one scenario there are many other issues going on with this setup.

Return to Top Reply Quote Quick Reply Quick Quote
#2260112 - 09/22/21 09:34 PM Re: TRID permissible purpose? Anonymous
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 77,247
Galveston, TX
I do not blame you in the least. It is a disaster waiting to happen.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top Reply Quote Quick Reply Quick Quote
#2260127 - 09/23/21 01:08 PM Re: TRID permissible purpose? Anonymous
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,417
Bloomington, IN
If it is clear there is going to be cash back and the "automatic LE" does not reflect the appropriate charges what are your compensating factors for supporting the bank is providing the LE in good faith based on the known information at the time the disclosure was issued? Regardless what boxes were checked by the applicant the bank had full knowledge the transaction involved cash back at the time they provided the LE.

These disclosure errors are a result of the bank not having things properly set up and bank errors do not constitute a valid change circumstance for revising the disclosure.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top Reply Quote Quick Reply Quick Quote
#2260162 - 09/23/21 06:14 PM Re: TRID permissible purpose? Anonymous
John Burnett Offline
10K Club
John Burnett
Joined: Oct 2000
Posts: 39,336
Cape Cod
If your bank paid a vendor for this loan estimate generating feature, I hope you have a contractual right to damages when the software generates an incorrect document, but I fear there is a clause that gets them off the hook if it's a case of "operator error," where the operator in this case is an applicant. I think it is folly to rely on a layperson to make the right decision in the scenario you have described.

If you're stuck with this system, you need controls that check for, and correct, obvious errors like this, BEFORE the loan estimate is provided or sent to the applicant.
Last edited by John Burnett; 09/23/21 07:07 PM. Reason: added thought
_________________________
John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8

Return to Top Reply Quote Quick Reply Quick Quote
Quick Reply:
HTML is disabled
UBBCode is enabled




Moderator:  MagicCity, P*Q, Truffle Royale