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Good Morning,
I was reading in the CFPB’s guide and was wondering if there have been any changes/revisions concerning 1026.19(e)(3)(iv)(A) (where you can only re-disclose if the sum of the changes push you over the 10% tolerance) since they published the most recent version of their guide last September. It seems crazy that we can have a changed circumstance bring us up to 9% over the disclosed sum amount but cant re-disclose because we technically are not past the tolerance yet. – Thank youThere hasn’t been any change to this that I’m aware of. This is the same as it has been for the GFE. If a changed circumstance will cause your disclosures to be out of tolerance then you may provide a revised disclosure reflecting the revised estimate of the charge(s).
1026.19(e)(3)(iv)(A) says you may provide a revised estimate of a charge if Changed circumstances cause the estimated charges to increase or, in the case of estimated charges identified in paragraph (e)(3)(ii) of this section, cause the aggregate amount of such charges to increase by more than 10 percent. It then goes on to define Changed Circumstance.
For those charges in the 10% tolerance category the aggregate increase would need to exceed the 10% tolerance. Otherwise if it was a 0% tolerance charge and it was out of tolerance by any amount it would qualify for re-disclosure if it resulted from a changed circumstance.
I guess I’m still confused. See integrated disclosure commentary pg 67-
ii. Charges subject to the ten percent tolerance category. Assume a creditor provides a $400 estimate of title fees, which are included in the category of fees which may not increase by more than 10 percent for the purposes of determining good faith under § 1026.19(e)(3)(ii), except as provided in § 1026.19(e)(3)(iv). An unreleased lien is discovered and the title company must perform additional work to release the lien. However, the additional costs amount to only a five percent increase over the sum of all fees included in the category of fees which may not increase by more than 10 percent. A changed circumstance has occurred (i.e. New information), but the sum of all costs subject to the 10 percent tolerance category has not increased by more than 10 percent. Section 1026.19(e)(3)(iv) does not prohibit the creditor from issuing revised disclosures, but if the creditor issues revised disclosures in this scenario, when the disclosures required by § 1026.19(f)(1)(i) are delivered, the actual title fees of $500 may not be compared to the revised title fees of $500; they must be compared to the originally estimated title fees of $400 because the changed circumstance did not cause the sum of all costs subject to the 10 percent tolerance category to increase by more than 10 percent.So we can re-disclose but can’t use the re-disclosed amount in the comparison chart if the changed circumstance was less than a 10% increase?aschliebe,
Yes, you are correct. If the affected estimates don’t exceed the tolerance amount for that tolerance category of charges, the revised estimate of those affected charges shouldn’t be used on the comparison chart. Since you would be within tolerance at 9%, I’m assuming you’re wanting to re-disclose as a way to inform the borrower, correct?Yes, we would want to inform the borrower but with the way I read it I fear that we would get a changed circumstance that is within tolerance therefore (lets say it brings us up to 9% above the original disclosed amount for the category) not allowing us to use the new figure in the comparison chart which only leaves us with a 1% cushion for overall increase. It just seems unfair. -Thanks for the listening ear!
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