The PMI companies we utilize have recently switched from Industry Standard PMI Rate Cards to Individual PMI Company Risk Based Pricing.

This means that when we quote PMI upfront for the LE, the chance that the final PMI rate at Clear to Close can change based on the final verified parameters of the loan ie; DTI ratio and credit score.

Because PMI affects the APR, my openers have been instructed to not move a loan forward without a matching PMI rate quote for the amount on the LE.

Because of this, I am inquiring regarding what would be the best practice for re-disclosure when the final PMI rate is different at time of Clear to Close.

First question; Is this scenario a valid change of circumstance? If so, can you provide any advice on the wording for that description? Can it be high level and state “Final DTI and Credit Score have been verified – Final PMI Rate has changed”

Second question; Should we re-disclose the above change of circumstance for the final PMI rate in LE world or with the Initial CD? I anticipate there being instances where the APR will vary by .125% either up or down.

Thank you very much for your help.

Unless it involves upfront PMI - PMI is not a fee tolerance issue. I assume you don't issue a CD until you have a clear to close - so make the adjustment on the initial CD. If you receive the updated PMI figures and you have to re-issue a LE for some reason, you would include the updated figures on the revised LE.

Randy, the OP (and me in a previous thread) are not worried about the fee tolerance. We're worried about the APR which, as the OP noted, could vary by more than .125% when the final PMI premium is known.

Then don't issue your initial CD until you get your clear to close and have the final PMI numbers and make the change on the initial CD and thus avoid an additional three business day wait rather then setting a closing date and then telling the customer that there is going to be a delay.

That's where I was leaning but wanted another voice (besides the one in my head) to chime in. Thanks, Randy!