redisclose GFE ?

I know that under the revised RESPA rules, if the customer did not lock the rate at the time of the initial GFE, then a revised GFE is required when the rate lock does occur. If there were no changes to the rate or related charges, is a GFE still required?

Yes. When the consumer locks the rate that will have an affect on the important dates section and you must update that section.

AH SO! Thank you so much! You are correct!

I wonder if all of the GFEs that are flying around are really helping the consumer better understand what they are getting in to?

I'm gonna go with .....NO! LOL!

Makes auditing a loan file a real treat!

So it is very clear that a new GFE is required with an initial lock. The question I still have is whether or not a new GFE is required upon a lock extension? Or relock? What if you don't charge an extension fee to the borrower?

Is it required? not that I find in the rules.
Would it be prudent? If the extension affects the important dates section, I'd redisclose unless the extension was for just a day or two to get to the closing.

Q&A 19 on page 8 does not refer to the "initial" GFE or rate lock. It simply refers to if the consumer locks the rate after the GFE has been issued the originator must issue a revised GFE updating the important date sections. Extending an expired rate lock would be initiating a new rate lock after a GFE has been issued and IMO require a revised GFE reflecting the changes the extension had in the important dates section of the GFE.

So, this may be a rather stupid question but I'm going to ask anyway. When the rate is locked, then the date on line 1 of the Important Dates section would state the rate lock date and line 3 would also need to be completed. Correct? I read through Important Dates section of the FAQ and didn't find anything about this. The lender's argument is that all of that information is on the rate lock agreement.

Is the day the rate is locked considered a "borrower requested change"?

Dan, does it change your position at all if we do not hold the borrrower accountable in any way for the changes to the important dates? Basically we will close the loan at the previously disclosed costs even if the failure to close by the end of the previous rate period costs our company a rate extension fee. I know the regs say "must issue" and that is very strong language, but I am struggling to see why this is required if the borrower is not being detrimentally affected by the lock extension.

I know, asking why with these regs will drive you crazy.

Drewella, the rate lock agreement is not a GFE and when the consumer locks the rate is the only time the loan originator must issue a revised a GFE.

Line 1 would be updated to show the date the rate lock agreement expires and line 3 would specify the number of days the applicant must go to closing after the rate is locked.


Brock, no it does not change my opinion. The redisclosure requirement is based on the fact the consumer locked the rate. Not whether the change is detrimental or beneficial. The rate lock changes the important dates section from the date of the rate lock therefore HUD is saying you must redisclose these dates to the consumer. Whether you or I see the reasoning is of no consequence, it's what HUD requires that matters. You will have to contact them for the reasoning of this requirement.

FAQ 4/2/10 P.9 20) reads:

Q: If a GFE has been provided and the interest rate has been locked may the loan originator provide a revised GFE if the borrower requests a different rate lock period?
A: If a borrower requests a change to the mortgage loan identified in a GFE and that request will change the terms of the loan the loan originator may provide a revised GFE to the borrower.


It says 'may provide' not 'must issue' as 19) does. What say you now, Dan?

Does not change my opinion. That question is under the changed circumstance section and the Q&A is stating the request for a new rate lock period would be a changed circumstance allowing a revised GFE.

Yes, Dan, but I thought we were discussing the idea of requiring vs allowing. imho, #19 says a rate lock REQUIRES a redisclosure while #20 says you MAY provide a disclosure if the borrower requests a different rate lock period. I just don't see where the extension REQUIRES a redisclosure. Guess we'll have to agree to disagree and put it on our list of things to banter about over that beer I still owe you.

edited to add: For the sake of clarification, the #20 I quoted above is right after the #19 you quoted and both are under the GFE - General section, not the changed circumstance section.

Well, my original question was concerned an initial rate lock that occurs after the GFE is issued. So per #19 we MUST reissue. Merci

Absolutedly agreed that you must redisclose when you lock the rate per #19, drewella.

Dan and I were answering Brock's question five posts after your original. Still hoping I may be able to sway his mind just once.

okay, different question. We instituted rate locks for HPML and HMDA purposes. They are not particularly customer driven, but we use a rate lock sheet that the borrower acknowledges and lock the rate for 30 days. I would think that these would be handled the same way for the important dates section. I don't know of any reason it has to be customer requested...any arguments ??

So, if you were going to honor the initial rate, after the lock as expired, you would re-disclose with the same rate lock date, and just adjust the lock period? I'm assuming you would have to keep the same rate lock date, correct? If you didn't your rate lock date & Index would not match.

How about Q&A 19 on page 8?

If by "acknowledges" you mean the applicant is agreeing to lock the rate for those 30 days then no arguments. But unless they are agreeing to the lock then I'll refer back to Q&A 19 because unless they expressively agree to the lock they are not locking the rate.

They sign the rate lock sheet, so I would say they truly are acknowledging it.

In a previous life I worked for a large bank that only required a GFE to be re-disclosed for rate locks and extensions if rate or fees increased. No need to re-disclose if rate/fees were the same or lower. (policy for new RESPA, not referring to guidelines before Jan 2010). I checked with someone still working for that bank and the policy has not changed.

I've recently learned at the bank I currently work at that not only is a new GFE required for locks and extensions, but if it isn't done w/in 3 days, the file won't be sold on the secondary market and will instead be closed as a portfollio loan using the secondary market rate/fees due to an incurable violation. Not a fun lesson to learn the hard way.

Anyone else gone through a similar situation after missing the 3 day window for re-disclosure after lock or extension?

If you missed your 3 day window you no longer have a qualified changed circumstance and have no basis for issuing a revised GFE and must live with the fees previously disclosed and in most cases this will likely put the loan outside the approved perimeters for the secondary market.


BTW...when the consumer exercises a rate lock option the lender must issue a revised GFE within 3 business days under the current rules.

To follow-up on this a bit...

If you have not issued a revised GFE for a fee within 3 days (say it was appraisal came back with Pest and Dry Rot) what do you think the proper procedure is?

I am getting that you go ahead and issue the revised GFE, to give an accurate view of costs, then remedy it with a lender -credit 'cure' on the Hud-1 for the fee. So Bank are disclosing the fee but doing cure by paying bank paying for it.

ETA: (and of course some high-intensity training for the staff who didn't issue it)

I am going to assume the Pest / Dry Rot discovery in the appraisal mandated a pest inspection. This would be a qualified changed circumstance allowing you to issue a revised GFE showing the inspection costs.

But missing the three day window to disclose it, which was the part I think Avanti was getting at, is not a violation. If the inspection is mandated in order to get the loan, then you're right, Avanti. You disclose and cure.

Has anyone run into this situation - Bank does not "rate-lock" per se, but obviously when the loan documents are drawn, the rate is "locked in" because - well, there is the rate right there on the Note!

So - I have heard of some auditors (not examiners mind you) say that since the rate is "locked" on the loan documents, a new GFE must be issued.

I personally think that's a waste of time, money, resources, paper, postage and only confuses everyone that much more.

What say you?

I say the auditors that say that are all wet. The rate is not locked and can float up to the time of closing. Without a rate lock, the rate is subject to change until the customer's signature ink hits the paper.

I disagree, Randy. Locking the rate is the only time that RESPA mandates a new GFE must be given. I'm sure that's what the auditors are referring to.

But doing it doesn't have to be a waste of time or postage or delay the closing. If you're locking the rate at the closing table, then just hand them the rate lock GFE before you start the closing.

Now, if the rate on the initial GFE is different from the rate on the closing docs AND that change affects the APR more than .25%, than you're caught by MDIA and have to give a new ETIL and wait the appropriate amount of time.

The bank setting the rate for closing when the consumer elected to float is not the consumer locking the rate. The consumer must exercise a rate lock option in order for the reissue mandate to kick in.

FWIW, I agree with Randy and Dan. A float is a float. For HPML purposes, we use the date the papers are drawn up for closing to re-check the loan...but no new GFE would be required.

I'll standdown and defer to the others on this one.
We don't do anything like this so that's why I thought the lock would occur at closing.
Just for the record, has this been touched on officially or even sent to HUD as a querry? If an auditor questions it, I'm concerned an examiner might too.

Q&A 19 on page 8 of the FAQs is pretty specific in its answer.


. . . if a borrower locks the interest rate after the GFE has been issued . . .

and absolutely no disrespect intended, but auditor's are not necessarily all that particularly knowledgeable about RESPA either.

I was just asking if anything had been said beyond the p8, Dan. There's so much that's been interpolated from the FAQs yet not confirmed by HUD. My fav is the cure for Blocks 1 and 2 and line A on the GFE. If I'm feeling gutsy, I can always ask when the examiners hit here in 2011...after they're done examining, of course.

Bringing back the dead here. I have an investor that says that our last GFE must match our final loan amount, I know that is not a RESPA requirement, but I cant find where to cite to show my investor when in fact its required to re-disclose a GFE.
help

RESPA FAQ p.8 - 19) Q: If a GFE has been provided and the interest rate has not been locked, can the loan originator provide a revised GFE when the borrower later locks the interest rate?
A: Yes, if a borrower locks the interest rate after the GFE has been issued, a revised GFE must be issued within 3 days of the interest rate lock reflecting the date that the interest rate lock is good through in Line 1 and ―N/A‖ in Line 4 of the ―Important dates‖ section of the GFE. Any interest rate-dependent charges (Block 2, Line A and Block 10 on the GFE) and terms that changed must also be updated on the revised GFE.

That is the only reference to when you MUST redisclose.
Whoever is telling you different at your investor is wrong. Experience tells me it's likely a low tier employee. Go over their head and ask to speak to the compliance manager. I doubt you'll even need the reference above if you can get to the top. They KNOW that's not right.

Thank you!!!

Keep in mind though, it is their sandbox and their rules. While not required or not even correct, there are investors who will not budge from that requirement and if they are buying your loan, it is their prerogative to get to decide which deals to buy/fund.

We have a scenario where the LO floated disclosures and the next day locked the rate; however, we missed the three day window for re-disclosures.

Do any of you have experience with the implications on this? Note that the LO committed to raising the credit $200 at time of rate lock, which we would apply as a lender credit on the HUD-1.

Based on experience, do investors automatically see this loan as ineligible for purchase?

Appreciate any insight in advance.

I'm confused.
Do you mean the LO issued for a floating rate and then missed redisclosing when he locked it a day later?
That's a violation but there's nothing that can be done to fix it. As long as it's a one time thing, not a pattern and practice, you should be ok at exam time.

As for the additional credit promised, just give it on the HUD. You don't have to show it on a GFE to give it.

Our investors won't accept any loan with late disclosures. Pretty much an automatic portfolio loan.

Ditto.