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#2260702 - 10/05/21 04:26 PM Revised LE/Cure
Auditor16 Offline
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Joined: Jan 2018
Posts: 38
There is an additional fee(s) for specific loans when they are processed for Fannie. The fees are disclosed on the Loan Estimate. The bank also has a no cost loan (similar to one), so the lender credit offsets the fees. When an application is changed to be taken into portfolio rather than sold, the Fannie fees are no longer applicable (typically noted when reviewed by Underwriting). Currently, the process is to wait on the invoice for the title company to show the decrease in fees, which ultimately decreases the lender credit. However, since the loan changed to portfolio, at that time, should the bank have known that the fees would decrease and sent a revised LE within 3 business days (as the lender credit then decreases) rather than wait for the invoice from the title company which is much later? Thanks!

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#2260703 - 10/05/21 04:48 PM Re: Revised LE/Cure Auditor16
rlcarey Offline
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Galveston, TX
How are you decreasing a lender credit. A lender credit can normally only decrease if it is an interest dependent credit based on a rate lock. You cannot just decrease a general lender credit because you decided that the loan was going to stay in portfolio. If you are choosing to disclose fees and then issue a lender credit for those specific fees - then why are they on the LE at all?
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#2260744 - 10/05/21 08:45 PM Re: Revised LE/Cure Auditor16
John Burnett Offline
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Read Randy's last sentence carefully. If you are not going to charge the fee but it's a fee that must be paid to a third party (appraiser, county clerk, closing agent, credit bureau, etc.), you don't need to include it on the loan estimate. That eliminates the need to show the offsetting lender credit on the loan estimate. And that eliminates the pickle you're in now

You leave the fees and lender credit off the LE, but you include them on the closing disclosure, using the specific lender credit method (putting the cost of the service you are paying in the "Paid by Others" column on page 3 (you may (but don't have to) "tag" those credits with an "(L)" to show they're paid by the lender).

Fees that are normally paid to the bank and not passed through to third parties (lender administrative fee, points, etc.) but won't be charged for a specific loan can be omitted entirely from both the LE and the CloD. No need for a lender credit for these if you are truly trying to make the loan "no costs except interest."
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#2260750 - 10/05/21 09:21 PM Re: Revised LE/Cure John Burnett
Auditor16 Offline
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Joined: Jan 2018
Posts: 38
Thank you John. I will circle back with management on this one. I did read this, however, they felt it was necessary to include the fees on the LE with the specific lender credits. So on the LE, the specific and any general lender credits are aggregated and shown in Section J. Then on the CD, they are shown in the Paid by Others columns attributed to the specific line item fees. Right though, this then causes a pickle. Thank you!
Last edited by Auditor16; 10/05/21 09:26 PM.
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#2260751 - 10/05/21 09:26 PM Re: Revised LE/Cure rlcarey
Auditor16 Offline
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Joined: Jan 2018
Posts: 38
Randy, I am confused by the first part, sorry. You can have a specific lender credit that does decrease if a fee comes back lower than expected; this would then decrease the lender credit. I was not referring to a general credit. In another post, it seems like perhaps if it is a "no cost" loan, then you don't truly have to disclose the fees or the offsets (I will look into more) on the LE. I am just not certain why it was elected to do the way it currently is done. I will follow up, thanks!
Last edited by Auditor16; 10/05/21 09:27 PM.
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#2260779 - 10/06/21 12:42 PM Re: Revised LE/Cure Auditor16
rlcarey Offline
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Galveston, TX
You might want to read the CFPB FAQs on lender credits.

https://www.consumerfinance.gov/com...tegrated-disclosure-faqs/#lender-credits

I am not sure how a decrease in an expected charge is a changed circumstance - onbly increases are a changed circumstance.

"Essentially, lender credits are a negative charge to the consumer subject to the good faith requirements of the TRID Rule, and must be considered when determining whether disclosures were made in good faith and within applicable tolerance standards. For example, if the creditor discloses a $750 estimate for lender credits on the Loan Estimate, but only $500 of lender credits is actually provided to the consumer, the actual amount of lender credits provided is less than the estimated lender credits disclosed on the Loan Estimate, and is therefore, an increased charge to the consumer for purposes of determining good faith under 12 CFR §1026.19(e)(3)(i)."
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#2281873 - 03/04/23 12:57 AM Re: Revised LE/Cure Auditor16
mac444 Offline
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Joined: May 2011
Posts: 78
Initial LE disclosed the lender credit amount based on specific fees paid by lender. A revised LE was issued adding a subordination fee (specific fee paid by lender) for informational purposes, thus increasing the lender credit. For purposes of determining good faith for tolerance violation of the lender credit when issuing the CloD, are we bound by the revised LE increased lender credit amount or the original LE credit amount since borrower is not paying for the specific fees?

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#2281874 - 03/04/23 12:18 PM Re: Revised LE/Cure Auditor16
rlcarey Offline
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rlcarey
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Galveston, TX
If you added a subordination fee in the borrower paid column, that was a changed circumstance. If you failed to do that within three business days, then you failed to timely issue a revised LE to reset your fee tolerance baselines. There is no relationship between that fact and to the fact that you also increased your lender credit. There is no "informational purposes" here. If you failed to do this timely, you would have to honor both the updated lender credit and cure for the subordination fee.

If the bank is going to be absorbing these fees, why are you even putting them on the LE in the first place? By doing that, all you are doing is complicating the issue and possibly having to provide a larger lender credit than necessary at closing, if fees decrease for some reason, as you cannot lower the lender credit.
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