HELP!!

If redisclosing under § 1026.19(e)(3)(iv)(E) , is anyone aware of any restrictions on WHEN this has to be done; other than not after a CD has been issued?


§ 1026.19(e)(3)(iv)(E)

(E) Expiration. The consumer indicates an intent to proceed with the transaction more than 10 business days, or more than any additional number of days specified by the creditor before the offer expires, after the disclosures required under paragraph (e)(1)(i) of this section are provided pursuant to paragraph (e)(1)(iii) of this section.

Official interpretation of 19(e)(3)(iv)(E) Expiration.
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1. Requirements. If the consumer indicates an intent to proceed with the transaction more than 10 business days after the disclosures were originally provided under § 1026.19(e)(1)(iii), for the purpose of determining good faith under § 1026.19(e)(3)(i) and (ii), a creditor may use a revised estimate of a charge instead of the amount originally disclosed under § 1026.19(e)(1)(i). Section 1026.19(e)(3)(iv)(E) requires no justification for the change to the original estimate other than the lapse of 10 business days. For example, assume a creditor includes a $500 underwriting fee on the disclosures provided under § 1026.19(e)(1)(i) and the creditor delivers those disclosures on a Monday. If the consumer indicates intent to proceed 11 business days later, the creditor may provide new disclosures with a $700 underwriting fee. In this example, § 1026.19(e) and § 1026.25 require the creditor to document that a new disclosure was provided under § 1026.19(e)(3)(iv)(E) but do not require the creditor to document a reason for the increase in the underwriting fee.

This is addressing when the 10 business days (for settlement costs to be good through) have passed but you don't have the applicants' intent to proceed. Assuming you have not extended that 10-business day time period on your own via the Loan Estimate or verbally, you can reset those fees without a valid changed circumstance.

You would not be required to, however.

In this case, we badly want to. The applicant went past the 10 days without ITP, and we disclosed 10 days as the fee expiration. HOWEVER, this is all far in the past at this point.

I don't see anything qualifying 'when' this would have to be done by for it to be legit though, other than standard rules about not issuing LE's after CD's. BUT, I've also never re-issued a LE/reset tolerances using this reason, and it feels like the sort of thing there's some sort of time qualifier on that I might be missing?

We ended up re-issuing a LE at EOD yesterday to reset tolerances but I am nervous that I missed something here in okaying this.

The longer ago it was the less valid the original LE it would be if the borrower didn't give their intent to proceed. I am curious what happened in the interim, as you can get intent to proceed orally and extend the lock in period orally. I'm also assuming you did not collect any fees in the interim. All that said, a lender is not required to lock fees forever with an LE.

The borrower gave their ITP, after the 10 days, but some time ago.

I think the revised Loan Estimate still needs to go out within the three business days of getting the ITP. In other words, Section 1026.19(e)(4) still applies:

(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.

Yes, I agree with Diane. The late ITP is simply another of the six reasons you can send a revised LE to adjust the cost estimate bases to avoid tolerance violations at closing, and like the other reasons, there is that timing deadline to contend with. If you sit on your hands and miss the 3-day revised LE deadline, you can't adjust your cost basis for the tolerance tests.

You could have avoided the problem if you followed up with the applicant at some point after the expiration deadline for the terms on the original LE and prodded the applicant to action (proceed or withdraw).