The bank prepares the CD using info from a payoff statement. The actual payoff amount is usually different. They do not update this information on the revised CD (post closing). Isn't this required?

They do not update this information on the revised CD (post closing). Isn't this required?

Absolutely.

Thanks Dan. Maybe they'll listen you.

The reduction or increase in the payoff amount would make the cash to close inaccurate.

(2) Subsequent changes.

(i) Changes before consummation not requiring a new waiting period. Except as provided in paragraph (f)(2)(ii), if the disclosures provided under paragraph (f)(1)(i) of this section become inaccurate before consummation, the creditor shall provide corrected disclosures reflecting any changed terms to the consumer so that the consumer receives the corrected disclosures at or before consummation. Notwithstanding the requirement to provide corrected disclosures at or before consummation, the creditor shall permit the consumer to inspect the disclosures provided under this paragraph, completed to set forth those items that are known to the creditor at the time of inspection, during the business day immediately preceding consummation, but the creditor may omit from inspection items related only to the seller's transaction.

Can we back up this train?

How does the payoff change AFTER closing?
If it goes up, who's paying the difference?
If it goes down, are you issuing the proper refund?

From Dan's citation:

If the payoff changes between the time you issue the CD and closing, the borrower should be getting a corrected CD AT closing.

Also, if it "only" involves per diem interest, a revised CD is no longer required.

The difference in the payoff is refunded. If we didn't collect enough the bank would absorb the small difference. (rarely happens) The CD is based on the payoff statement obtained shortly before closing.

If the bank eats the small difference and wasn't aware of the difference until after closing, no revised closing disclosure is required (although you aren't prohibited from providing one).

If the payoff was less than the payoff on the closing disclosure, and you refund the difference, that affects the amount actually paid by the borrower, and a revised closing disclosure is required. Print it out, highlight the changed amount(s) -- it will affect more than one figure -- and include a cover letter or note (copy in file) explaining why you sent the piddling little check and the new disclosure. You don't need to get the borrower's signature on the new disclosure (unless you are under more stringent requirements of an investor).

Not sure if it is not caused by a per diem issue, how your payoff cannot be correct.

The borrower could have made a payment after the payoff statement was received. That would make the payoff amount and the per diem amount both too high.