If you want to eliminate any civil liability, you would refund so that the finance charge was not understated by more than $100 or in the case of a loan subject to the right of rescission, $35.
TRID Violation on Loan for Purchase
A lender submitted a loan for purchase and I need help with a TRID violation that I found on the loan. The lender forgot to include two fees in the finance charges and the final closing disclosure signed by the borrower is understated by $535. Typically, we've always asked for a refund cure from the lender for the amount understated and a revised closing disclosure. The lender reviewed the situation and responded to me with this: "After reviewing this loan I concur that neither the Purchase Review Fee ($500) nor the Wire Transfer Fee ($35) were included in the finance charge. These fees are setup to be included in the finance charge. Support has looked into the issue and it appears that a user mistakenly or accidentally removed the check boxes. We are in the process of modifying our security settings to ensure that only limited users will have the security to change the prepaid finance status of any fees. I have generated new calculations and the Finance Charge is now $93,017.70; Amount Financed is $97,496.59; and APR is 5.076%. The APR did not increase beyond tolerance. The change does not impact the amount of closing costs nor does it change the cash to close required from our member; therefore this does not constitute a post-consummation event (1026.19(f)(ii)) nor does it fall under the clerical error carve out (1026.19(f)(2(iv)) so there is not a way to cure but rather it is a technical violation that we will report to stakeholders." The lender is stating that yes, the finance charge was understated, but this is not something that can be cured as it is was not a good faith estimate of itemized charges 1026.19(f)(2)(v), and it was not a clerical error. At this point we have two options: • non-purchase for non-compliance with TRID • allow even though there may be harm to borrower. Would issuing a refund (cure) for an understated Finance Charge (assuming the Finance charge was understated by more than $100) bring the loan into compliance with TRID similar to issuing a tolerance cure for a specific closing cost fee increase?
First published on 04/21/2019