Untimely LE Secondary Market Loan

Our process has always been to not charge the borrower any of the fees on an untimely LE situation. In the last few weeks, we had an investor kick back a secondary market file of this nature and told us we should have denied the file and started over once we realized we had a timing violation. What? This does not seem in the best interest of the customer. What do we even deny them for? I dismissed this as a one-off. Now we have a second investor telling us the same thing. Am I thinking about this all wrong? Maybe what they are really telling us is that they won't buy a TRID loan with a timing violation?

I tried to research previous posts but didn't see anything recent. Appreciate any help!

Likely the investor will not buy a loan with a timing violation - that is a true statement. But an investor is going a little rogue in suggesting that a creditor should deny a loan application because the lender screwed up.

FNMA & FHLB are our main investors and I've not heard this from either. I'd take it further up the food chain to the investor's compliance department because what they're telling you is wrong. Basically they're telling you to cover up your mistake and collect the fees from the borrower under a new app and LE. I can guarantee you examiners will not like that as a bank procedure.

You might want to review this thread for more information on what doing what the investor is telling you to do may lead to.