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#2045588 - 10/22/15 01:47 PM Rate Lock - No Changes
Summer101 Offline
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If the rate is not locked when the LE is initially provided, is a revised LE required when the rate is ultimately locked in cases where there are no changes to the rate or fees? The only change that would appear on the LE is the "Rate Lock" field would change to "Yes."

I just want to be sure I'm not reading to much into the reg when it says the creditor "shall provide" a revised LE when the rate is locked.

19(e)(3)(iv)(D) Interest rate dependent charges. The points or lender credits change because the interest rate was not locked when the disclosures required under paragraph (e)(1)(i) of this section were provided. No later than three business days after the date the interest rate is locked, the creditor shall provide a revised version of the disclosures required under paragraph (e)(1)(i) of this section to the consumer with the revised interest rate, the points disclosed pursuant to ยง 1026.37(f)(1), lender credits, and any other interest rate dependent charges and terms.

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TRID - TILA/RESPA Integrated Disclosures Rule
#2045591 - 10/22/15 01:52 PM Re: Rate Lock - No Changes Summer101
Red Raiders Offline
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Yes, you must issue a revised Loan Estimate when the rate is locked if a Loan Estimate was issued previously showing the rate was not locked even if everything else is still the same. This was also a requirement for the GFE under previous rules.
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#2045594 - 10/22/15 02:08 PM Re: Rate Lock - No Changes Red Raiders
Summer101 Offline
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Thank you!! smile

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#2045637 - 10/22/15 04:26 PM Re: Rate Lock - No Changes Summer101
Truffle Royale Offline

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Similar to the GFE, you're not just marking the Rate Locked box 'yes', you're telling the borrower the date the rate is good through.
That's important so they know when they must close by.

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#2052366 - 12/03/15 07:59 PM Re: Rate Lock - No Changes Summer101
AnotherDayinParadise Offline
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Truffle Royale, are you also updating the date the closing costs expire (the 10-business-day window from the Date Issued) on the revised LE? Or, would it never change? I don't think it should change from the original LE; however, I can't find anything in regulation that supports this.

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#2052376 - 12/03/15 08:20 PM Re: Rate Lock - No Changes Summer101
rlcarey Online
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That date doesn't change. They have already given you an intent to proceed so that date becomes meaningless.
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#2052427 - 12/03/15 10:49 PM Re: Rate Lock - No Changes rlcarey
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I agree, rlcarey...thanks!

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#2052856 - 12/07/15 06:59 PM Re: Rate Lock - No Changes Summer101
complynewbie13 Offline
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Another question on this. We issued a closing disclosure thinking that something would be complete by the time the loan actually closed. This "item" did not get done in time and the result is that the rate lock expired. If we extend the rate lock again (same rate, so the APR would not change) do we need to simply issue a revised closing disclosure right at closing? We can't reissue a loan estimate with the adjusted rate lock info because we have already issued a closing disclosure. Plus, the changes do not trigger the re-disclosure with a new waiting period because the APR didn't go out of tolerance and a prepaid penalty didn't get added. Really, the only thing that would be different on the revised cd is that the loan date would be different.

Am I thinking of this correctly? It just feels wrong to not send the customer something new within 3 business days.
Thanks,

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#2052913 - 12/07/15 11:10 PM Re: Rate Lock - No Changes Summer101
rlcarey Online
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If no fees changed, any correction on dates would show on the CloD delivered at closing.
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#2054393 - 12/16/15 03:21 PM Re: Rate Lock - No Changes Summer101
Truffle Royale Offline

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Different permutation on this issue, maybe due to overthinking so I want to bounce it around here.

Is it ok to assume the borrower is going to want a rate lock extension and just do it or do I need a new rate lock agreement?

In either case, am I understanding that I do not have to do a new LE, I can just update the dates on the CD and be done with it?

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#2054397 - 12/16/15 03:36 PM Re: Rate Lock - No Changes Summer101
John Burnett Offline
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Nope.

First, because you always have the ability to honor an expired rate lock agreement, you shouldn't assume it has to be extended, especially if you impose a fee for the agreement or extension. You should check with legal counsel to determine whether your agreements can be extended or require replacement with a new agreement.

Secondly, if there is a rate lock renewal, extension or replacement, you have to issue a new LE unless it would require that you issue it on the same day as you are issuing the closing disclosure.

There are no date fields related to a rate lock on the Closing Disclosure.
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#2054399 - 12/16/15 03:38 PM Re: Rate Lock - No Changes Summer101
Truffle Royale Offline

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Thank you, John, for confirming my thought process.

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#2054830 - 12/17/15 08:57 PM Re: Rate Lock - No Changes John Burnett
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Now that prime has increased, I have a couple questions on variable rate loans. We have a couple of pending loans that have a variable rate. We locked those rates when we issued the LE, the locks have since expired. Do we need to re-issue the LE with the new prime rate since the lock is expired and prime has increased or can we still honor the rate we originally locked on the LE? How does this work? This is the first time I have had to deal with prime changing. Thank you.

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#2054833 - 12/17/15 09:01 PM Re: Rate Lock - No Changes Summer101
rlcarey Online
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With no lock in place, you quote the rate that the loan will close at on the CloD, regardless of how you choose to calculate it.
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#2054841 - 12/17/15 09:10 PM Re: Rate Lock - No Changes rlcarey
TaraTLR Offline
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So if we choose to honor the rate that was locked we are still ok? We wont have to increase it because of prime increasing?

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#2054862 - 12/17/15 09:37 PM Re: Rate Lock - No Changes Summer101
rlcarey Online
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That is totally up to you. The impact of offering a discounted loan rate will have to be taken into consideration.
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#2054869 - 12/17/15 09:45 PM Re: Rate Lock - No Changes rlcarey
TaraTLR Offline
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So we would have to book the loan with the new prime index and lower our rate to honor the rate lock, is that correct? Or can we book our loan with the 3.25% prime index rate? This seems really confusing to me. Am I over thinking this?

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#2054870 - 12/17/15 09:48 PM Re: Rate Lock - No Changes rlcarey
TaraTLR Offline
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So do we book our loan using the 3.50% prime index and then lower our rate to honor the lock? Or do we book the loan using the 3.25% prime index? This is really confusing to me. Am I over thinking this?

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#2054871 - 12/17/15 09:49 PM Re: Rate Lock - No Changes Summer101
TaraTLR Offline
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Sorry for the double submission. I got a failed error the first time I responded.

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#2054917 - 12/18/15 02:30 PM Re: Rate Lock - No Changes Summer101
rlcarey Online
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If you have a valid rate lock in place at the time of the loan closing, you have to honor the rate lock. If you have no valid rate lock in place, then you are free to set the rate on the loan in any manner you choose. So, we cannot tell you what you should or should not do.
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#2054925 - 12/18/15 02:45 PM Re: Rate Lock - No Changes Summer101
Dan Persfull Online
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The impact of offering a discounted loan rate will have to be taken into consideration.

Under the regulation they can go back 45 days, the most common look back period, and use any index value within that date range. They would set the initial rate based on that value and future rates would be based on changes in the index value and taking into consideration rate caps.

IMHO the initial rate if set and/or locked under their index + margin formula and using an index value within their look back period would not be a discounted rate.
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#2055026 - 12/18/15 07:17 PM Re: Rate Lock - No Changes Summer101
Comply13 Offline
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I have a question that relates to the topic of this thread. We have a variable rate construction loan application priced at the prime rate (WSJ) adjusting monthly that has been disclosed on but not yet approved. We do not lock rates on construction loans. Because prime changed do we need to re-disclose the LE since the APR has adjusted more than the tolerance? Based on the last two responses I'm thinking that it is up to us to decide which rate we choose to close with and if it is 3.50% we need to re-disclose.

At this point it would be easy to say we will close at 3.25% and it will adjust to 3.50% after the first month. However, if prime decreased it would not benefit the customer to do this. Is this an instance where we need to decide on a process and be consistent on these types of loans?

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#2055039 - 12/18/15 07:33 PM Re: Rate Lock - No Changes Summer101
rlcarey Online
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Again. On an un-rate locked loan, how you set your initial interest rate is totally up to the bank. Consistency is always important from a fair lending standpoint.
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#2055041 - 12/18/15 07:36 PM Re: Rate Lock - No Changes Summer101
John Burnett Offline
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No. Changes in the rate are not changed circumstances. Your loan estimate is not binding as to the rate, and the rate is not an element on which there can be a good faith tolerance concern. Take the (hopefully) ridiculous example of a LE on which a rate of 3.00% was used for payment determination and an APR of 3.18% was disclosed. Six weeks later, when the bank is ready to issue the CloD, its rate for the loan has risen to 6.00% with an APR of 6.25%. All the bank has to do is issue the CloD (on time, of course) reflecting the new rate. The borrower has presumably been in the loop and knows that rates are up. If she's not, she's still able to back out.
Last edited by John Burnett; 12/18/15 07:39 PM.
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#2055303 - 12/22/15 04:05 PM Re: Rate Lock - No Changes Summer101
Still Smiling Offline
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Ok, just to be sure I understand the answer to complynewbie 13's question;

If you have already provided the CD but the rate expires and the rate will remain the same, is it permissible to provide another Closing Disclosure at closing?

What if the rate lock expires after the CD has been provided but an rate extension fee will be accessed to borrower but the APR is not out of tolerance, can you provide the CD at closing?

Sorry this is confusing to me.
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