LO took loan app back in July as a Fixed rate, never issued any required disclosures. In Nov he changed the product from a fixed to an ARM, still no disclosures issued for the Fixed, no new required disclosures for the ARM nothing documented in file for the product change. Based on one of the email replies, it appears he was "waiting for income documents". Yea, before sending disclosures you asked for income docs, you can't do that until you've issued the LE. I'm guessing that the income docs revealed the borrower did not qualify for a fixed rate loan so that is the reason for the undocumented product change. Appraisal was ordered and came back in Nov. No Request for Additional Information has been sent to the borrower indicating that we needed anything else to approve/deny the loan. Several emails have been sent to the LO and his processor between Aug-Nov. The loan has been showing on weekly reports to the LO/LP so they can't say they didn't know. At this point I need to get his supervisor/management involved, however I know the question they will ask is - Can we issue the disclosures on the ARM now and document the reason(s) for all the other violations. Since we never issued a LE, can the borrower be charged any closing costs.

You are asking us to make a business decision for you.

But IMHO: Clearly you cannot categorize this issue as a simple error or oversight. It is a blatant disregard for the regulatory requirements. This officer and maybe the processor should be subjected to disciplinary action and the file should be immediately assigned to another loan officer that knows what they are doing, and the bank should pick up the closing costs.

Wasn't asking for a business decision. I know this is a blatant error since I have the weekly emails to show after the report went out what was the status of the loan. I'm mostly trying to figure out since we never issued disclosed, can we even charge any fees and if this is stated anywhere. If we can issue disclosures now and not have any penalty, it's likely to happen again since he'll think it's not a big deal.

I indicated what I would do - anything else is a business decision.

Since we never issued a LE, can the borrower be charged any closing costs.

Has a CD been issued? If so then there was no LE issued to establish a baseline and 10% of $0 is $0 so IMO you would have to cure all charges subject to tolerances assessed to the borrower.

There is nothing I'm aware of preventing a late LE being issued (other than when an CD has been issued) but depending how late it is issued, and under the circumstances your describe, I think you will have a hard time justifying it was issued in good faith.

document the reason(s) for all the other violations.

Which reason are you going to document? 1) Loan Officer stupidity or 2) Loan Officer blatant disregard for law.

After six months, does the applicant still want the loan?
When applications dwindle, LOs tend to drum up old apps to throw at the wall and see if anything sticks.
I would start by having a competent LO contact the applicant and see if they even want to procede.
If yes then I agree with Randy and Dan, the bank pays for everything and prays this doesn't get pulled for an exam. It's riddled with violations of TRID and Reg B just to name a few.