[Quen Moore]

We have an appraisal that came back higher than expected, which decreased LTV and PMI is no longer required. Fannie Mae price lowered due to this, since PMI loans are less risky to them. My mortgage department would like to add a discount point to the revised LE to recoup some of the money lost. Would this be valid? Rate is already locked and was locked based off of an estimated LTV with PMI.

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[jholzknecht]

There are a lot of layers in this scenario. There are no examples in the regulation or the Commentary that directly reflect the facts presented here.

A discount point is payable to the creditor and falls into the 0% tolerance category. The desired change cannot occur unless there is a basis for making the changes, such as in the case of a changed circumstance or a rate lock.

There is no discussion in Regulation Z or the Commentary that allows the creditor to add additional finance charge due to change in the price that Fannie is willing to pay for the loan has declined. There are examples where the rate changes as a result of a rate lock. In your case the rate was locked and is not changing.

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