I know that increasing the loan amount isn't necessarily a changed circumstance unless the increase causes a fee change. However, wouldn't it ALWAYS change the daily interest amount? Therefore, a changed circumstance would be warranted?

It is in an unlimited tolerance category, so who cares?

To re-word your question, Swiggles. An increased (or decreased) loan amount is always a changed circumstance. Whether you choose to re-disclose or not is typically based on whether a 'significant' fee increases or not, or a rate lock event has occurred. Anything more is just a waste of time, paper and potentially confusing to the customer.

There was a previous discussion about this whereby I was finding instances of officers re-disclosing for what was not really a changed circumstance because the change did not affect any fees. I was finding that since at this point, the officer now knew the exact hazard insurance amount and perhaps the exact title policy amount, he/she was changing those fees as well. The consensus of the discussion was that even though the usual fees changed, such as hazard insurance were unlimited tolerance fees, the lender should still NOT change those fees. And certainly not alter any 10% fees not affected by the changed circumstance.

I have been telling the lenders NOT to do a changed circumstance for an increase in the loan amount because typically, the increase doesn't affect any fees. But then it occurred to me that it DOES affect the daily interest amount. So now I'm re-thinking what I told the lenders.

What should be the norm for this?

I don't like giving flat answers to an issue that requires a certain amount of if/then to understand.
To say 'never redisclose an increased loan amount' would only work if there are NO fees based on the loan amount. Off the top of my head, I can think of two that could result in cures if no redisclosure was done: origination fee based on percentage of loan amount and title insurance/cost per thousand based.

So I've trained all of my LOs to look at the fees that the changed circumstance affects. If we need to capture one that goes up, then redisclose.

But, I've added a second set of eyes to the equation by not letting LOs redisclose. They give it to a processor who double checks (and brings to me if necessary) the need to redisclose and prepares the new GFE and TIL if required.

I understand, yes......not saying that I would tell LOs NEVER to re-disclose. But what if the ONLY fee to change on an increased loan amount is the daily interest charge.....would a changed-circumstance re-disclosure be in order?

No.

imho, you're back to too much paper only confusing the borrower, swiggles. You could redisclose if the per diem changes but Joker and I agree that it is not in order.

If none of your fees that are subject to the tolerances are affected then why on earth issue a revised GFE if not required to do so?

The more paper handled the more opportunities created for potential errors.

Great points everyone!! Thank you so much!!

I've got a sort-of similar problem in front of me. We're getting ready to close the permanent take-out of a construction loan. Earlies for the permanent were done at the beginning of construction, but they failed to issue the 60 day letter. In the meantime, the loan amount has increased, the rate has decreased, and the loan term has changed. Also, the increased loan amount means we're having to get a deed modification as well as increase the state intangible tax amount.

I know we have a timing problem. Regardless of that, do you think we could call the increased loan amount a changed circumstance and issue a new GFE showing the corrected attorney fee and taxes (since those are the only two amount-related items)? We have to issue one anyway due to the rate now being locked.

Rate lock and term change, no problem.

However, if your loan amount increased (due to cost overruns, presumably) and you knew that (based on an increase in the CL) some time ago, then no...I'd say you are stuck with what you originally disclosed.

Thanks, as usual!