I have come across a scenario that seems odd to me but I am not sure that it is actually wrong.

The loans I am looking at have CDs when the rate locks instead of an LE as I would expect to see. So the transaction starts with the LE but whenever the loan locks it is always done with the CD even if the closing isn't expected for up to 45 days. Prior to the TRID fixes, this would create a problem if any of the fees changed but now that you can update tolerances with a CD it isn't the same problem.

Maybe I am overthinking it but it just seems wrong when the regulation references that the CD is supposed to represent the actual terms and actual costs but at 45 days out?

Would appreciate in particular if this is actually prohibited somewhere that I am missing but also appreciate any general comments or concerns with the practice.

Thank you.

The following says you can use a CD if it is on or after the date the CD must be provided under 19(f)(1)(i). That means normally within four business days of closing.

19(e)(3)(iv)(D) Interest rate dependent charges.

2. After the Closing Disclosure is provided. Under § 1026.19(e)(3)(iv)(D), no later than three business days after the date the interest rate is locked, the creditor must provide to the consumer a revised version of the Loan Estimate as required by § 1026.19(e)(1)(i). Section 1026.19(e)(4)(ii) prohibits a creditor from providing a revised version of the Loan Estimate as required by § 1026.19(e)(1)(i) on or after the date on which the creditor provides the Closing Disclosure as required by § 1026.19(f)(1)(i).

Then look at 19(f)(1)(i) - Scope:

Comment 2 - ii. Estimates. If an actual term is unknown, the creditor may utilize estimates using the best information reasonably available in making disclosures even though the creditor knows that more precise information will be available at or before consummation. However, the creditor may not utilize an estimate without exercising due diligence to obtain the actual term for the consumer's transaction.

How in the world is issuing a CD 45 days in advance exercising due diligence. This is a train wreck waiting to happen. They are neither acting in good faith or exercising due diligence.

I agree 100% with Randy that good faith and due diligence is not be exercised.

The Bureau concludes that the rule's existing provisions should prevent creditors from sending Closing Disclosures very early in the process before engaging in due diligence.

With respect to the accuracy standard that applies to the Closing Disclosure, the Bureau concludes that substantive changes to the TILA-RESPA Rule's existing provisions are not necessary to prevent creditors from sending Closing Disclosures very early in the process before engaging in due diligence. The Bureau believes the existing Closing Disclosure accuracy standard already accomplishes that objective. Existing § 1026.19(f)(1)(i) and comment 19(f)(1)(i)-1 require creditors to disclose on the Closing Disclosure the actual terms of the credit transaction. Existing comment 19(f)(1)(i)-2 also permits creditors to estimate disclosures on the Closing Disclosure using the best information reasonably available when the actual term is not reasonably available to the creditor at the time the disclosures are made. Comment 19(f)(1)(i)-2 provides that the “reasonably available” standard requires that the creditor, acting in good faith, exercise due diligence in obtaining the information. Further, comment 19(f)(1)(i)-2.i.A provides an example illustrating the “reasonably available” standard for purposes of § 1026.19(f)(1)(i). Specifically, comment 19(f)(1)(i)-2.i.A assumes that a creditor provides the Closing Disclosure for a transaction in which the title insurance company that is providing the title insurance policy is acting as the settlement agent in connection with the transaction, but the creditor does not request the actual cost of the lender's title insurance policy that the consumer is purchasing from the title insurance company and instead discloses an estimate based on information from a different transaction. Comment 19(f)(1)(i)-2.i.A provides that the creditor in the example has not exercised due diligence in obtaining the information about the cost of the lender's title insurance policy required under the “reasonably available” standard in connection with the estimate disclosed for the lender's title insurance policy. Regarding a commenter's request for clarification as to whether creditors can reset tolerances using a Closing Disclosure after issuing an initial Loan Estimate but without ever issuing any revised Loan Estimate, the rule does not prohibit creditors from doing so but creditors must otherwise comply with the rule, including its Closing Disclosure accuracy standard. The Bureau will continue to monitor the market for practices that do not comply with the rule's Closing Disclosure accuracy standard."

Thank you both for the responses. Very helpful information.