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Rate Lock Extension Fee Incorrectly Disclosed

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Question: 
If a Rate Lock Extension Fee was incorrectly disclosed on a revised CD as Origination Points, can this be corrected with another revised CD before closing, or corrected on the final consummation CD?
Answer: 

Yes, it can and should be corrected. There's no need to issue a revised closing disclosure before closing, but the consumer should receive it at the closing.

However, if that rate lock extension fee was not on a loan estimate issued before the closing disclosure (as might be the case if the rate lock extension was executed just before the closing disclosure was issued), there could be a problem, since the closing disclosure will have been the initial estimate of that fee (in lieu of a revised LE). At closing, it could be argued that the fee when correctly disclosed creates a 0% tolerance error, requiring a lender credit cure.

First published on 06/30/2019

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