I am reviewing a loan and have a question.
• Revised Loan Estimate issued to Borrower locked with lender 4/22/2022; 7-1 ARM @ 3.375%; Loan Size $706,000; Expiration on lock is 6/4/2022.
o A North Carolina Rate Lock Agreement was issued based on the terms above. Expiration 6/4/2022.
• New Loan Estimate issued 4/26 with a Change of Circumstances indicating loan amount change and interest rate change.
o COC and new lock info is dated 4/26/2022; 7-1 ARM @ 3.75%; Loan Size $726,000. This is how the loan closed with an increase in rate from 3.375% to 3.75% after the initial rate lock and prior to the expiration.

I was always under the impression the rate could not go up once the loan is locked. The loan amount change from $706,000 to $726,000 would not trigger a change in conforming to Jumbo rates. Yes there should be a COC based on loan amount, but is there a valid base within TRID to also increase the interest rate at that time?

As always, thanks for your input.

Your thoughts?

You need to read your rate lock agreement that was signed on 04/22/22. Under what conditions could it be voided. If the customer requests an increase in the loan amount, does that void the rate lock? You have to start there. Likely it will.

If that is so, then that rate lock was terminated at the time of the request and the borrower signing a new rate lock agreement would be a changed circumstance allowing the adjustment of any interest rate dependent fees that may have changed between the two rate locks. If all that was changed was the interest rate was higher, then technically, a new Loan Estimate was not even triggered, as only the initial rate lock triggers a new loan estimate.

Thanks for your reply. Seems like this is an item that could use CFPB modification or improvement. Nothing stopping an unscrupulous originator from playing the system to increase rate and in the case of a broker or correspondent, capture some additional profit.

Well, if I had a rate lock agreement with you or anyone else that had not expired or was not terminated under the conditions found in rate lock agreement, you can bet your bottom dollar that I would have my day in court. This is a contractual issue and not a disclosure or compliance issue.

Agree on all points! Thanks