[lfink]

My mortgage department and I just had a meeting and came up with questions that pertain to change circumstances. Background information. We allow our customers to shop for their title fees and provide a written list of providers to them.

1. We are providing a Revised LE because the interest rate is now being locked. At this time we have found out from the customer where they want their title work completed and the customer chose a title company not on our written list of providers.
a. Can we change the title fee amounts on the Revised LE since we now know the actual title fees from the title company the customer is going with?
b. Is this considered a change circumstance? Or do we change the title fees when we issue a CD?
c. If this is a change circumstance, would we have to provide the Revised LE with the updated title fees from the new title company within three business days of finding out about the new title company?

Thank you for your help!

Topic

[kmeade]

I’m interested in a response to this question as well

[rcooper]

You have a couple of things to consider with this scenario. First you have the rate lock change circumstance which does require you to only disclose changes associated with locking the rate (e.g. interest rate, points, lender credits, etc). The rate lock changed circumstance does not allow you to reset tolerances of fees unrelated to the rate lock.

The second issue is the title work. First, since you are allowing the borrower to shop for the service and providing them with a list of providers, if they select a provider not on the list the charge is not held to either the 0% or 10% tolerance category – that fee can change. So you don’t have to worry about having to reimburse if there is a change since the borrower selected a provider not on the list.

For informational purposes (not to reset the tolerance), we believe you can include on the LE the change to the amount of the title work that you become aware of. The proposed amendments to the TRID rules explain that you may reissue LE for informational purposes (even if it won’t reset a tolerance), which we advocate. Specifically it states:
Comment 19(e)(3)(iv)(A)–1.ii states that
§ 1026.19(e)(3)(iv) does not prohibit the
creditor from issuing revised disclosures
for informational purposes, even in
situations where the creditor is not
resetting tolerances for any of the
reasons stated in § 1026.19(e)(3)(iv)(A)
through (F).
See page 54333 of the proposed changes linked here: https://www.gpo.gov/fdsys/pkg/FR-2016-08-15/pdf/2016-18426.pdf.

Keep in mind, the regulation is clear that no other fees except those associated with the rate lock may be changed when you are providing a revised LE due to a rate lock (you would need an applicable CC to change any other fees). Since you will be including this on the same revised LE that you are issuing due to locking the rate you will need to document your file that the change in the title fees are not associated with the rate lock and are not for purposes of resetting a tolerance, but for informational purposes only (document why the fees changed from what was disclosed and the fact that they aren’t held to a tolerance and why, so it is clear you didn’t include the revised fee as a means to reset the tolerance).

[Author]

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