Corrected CD - APR and Finance Charge Tests

1026.19(f)(2)(ii) indicates that if we have a corrected CD and the APR (according to the rules at 1026.22) is not accurate, then there is a new waiting period to close. When looking at the APR rule at 1026.22(a)(4) there is the additional finance charge test to determine if the APR can be considered accurate.

My question is this - Does the finance charge rule only apply in the case that a fee was disclosed but was incorrectly coded so that it was not included as a finance charge and therefore affected the finance charge and APR disclosed to the customer or does this rule also apply when a completely new fee is added or a fee is increased and therefore increases the finance charge on the corrected CD?

Thanks in advance.

The requirement to issue a revised CD is totally based on the APR only.

As RL mentioned, it is a strict APR comparison. If more than .125% or .25% of a variance, depending on whether the transaction is "regular" or "irregular," then a new 3 business day waiting period is triggered. So, this could potentially happen with any of the methods you mentioned (incorrectly coded, newly added, or increased/decreased).

So to confirm, even if the APR was considered "accurate" by way of the 1026.22(a)(4), it doesn't matter because the only test that applies for TRID corrected CD disclosure and waiting period for consummation is the test at 1026.22(a)(2) and (3) only.

The annual percentage rate disclosed under § 1026.38(o)(4) becomes inaccurate, as defined in § 1026.22.

It is the whole section and not specific sections of 1026.22.

Not sure what you may have meant here by "corrected CD disclosure," as you could have been referring to a "revised CD," but any change in the APR would require a "corrected CD;" however, it is the amount of the change that determines the 3 business day waiting period or not.

Example—APR becomes inaccurate.
Assume consummation is scheduled for Thursday, June 11 and the disclosure for a regular mortgage transaction received by the consumer on Monday, June 8 under § 1026.19(f)(1)(i) discloses an annual percentage rate of 7.00 percent:

On Thursday, June 11, the annual percentage rate will be 7.10 percent. The creditor is not required to delay consummation to provide corrected disclosures under § 1026.19(f)(2)(ii) because the annual percentage rate is accurate pursuant to § 1026.22, but the creditor is required under § 1026.19(f)(2)(i) to provide corrected disclosures, including any other changed terms, so that the consumer receives them on or before Thursday, June 11.

CD has already been issued. Processor disclosed 1st payment date as 09/01/18. Closing is set for tomorrow. Processor says she feels she should have set for 10/01/18 because the borrower will only have 12 days between end of ROR and 1st payment date. Recalculating payment based on 10/01/18 APR is still within tolerance. No increase in any fees. Can we do this? Do we issue another CD? No new waiting period? correct?

Yes

Thanks Randy