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Good Afternoon,
Can a general lender credit change if it is tied to the rate and the rate lock changes? For example if we lock a rate with an investor and later switch investors due to a changed circumstance (for example something on the appraisal makes it so the original investor will not buy the loan) and lock with someone else if the lender credit would be less with the new investor is this acceptable?
Thanks!A few questions that we considered while reviewing this question:
Is the bank the broker? If the bank is the broker, then the creditor should provide an adverse action notice as a result of the denial. But if the bank is the broker why is the bank providing the LE and the revised LE?
We assumed the bank was the creditor and therefore responsible for the disclosures. If so, then there is a legitimate changed circumstance and that would allow for a reduction in the lender credit:
Changed Circumstance: With respect to whether a changed circumstance or borrower requested change can apply to the revision of lender credits, the Bureau believes that a changed circumstance or borrower-requested change can decrease such credits, provided that all of the requirements of § 1026.19(e)(3)(iv), discussed below, are satisfied.
1026.19 (e)(3)(iv) refers to (iv) Revised estimates. For the purpose of determining good faith under paragraph (e)(3)(i) and (ii) of this section, a creditor may use a revised estimate of a charge instead of the estimate of the charge originally disclosed under paragraph (e)(1)(i) of this section if the revision is due to any of the following reasons:
(A) Changed circumstance affecting settlement charges. 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. For purposes of this paragraph, “changed circumstance” means:
(1) An extraordinary event beyond the control of any interested party or other unexpected event specific to the consumer or transaction;
(2) Information specific to the consumer or transaction that the creditor relied upon when providing the disclosures required under paragraph (e)(1)(i) of this section and that was inaccurate or changed after the disclosures were provided; or
(3) New information specific to the consumer or transaction that the creditor did not rely on when providing the original disclosures required under paragraph (e)(1)(i) of this section.
In addition, the redisclosure rules in .19(e)(4) should be followed upon notification of the changed circumstance:
(4) Provision and receipt of revised disclosures. (i) General rule. Subject to the requirements of paragraph (e)(4)(ii) of this section, if a creditor uses a revised estimate pursuant to paragraph (e)(3)(iv) of this section for the purpose of determining good faith under paragraphs (e)(3)(i) and (ii) of this section, the creditor shall provide a revised version of the disclosures required under paragraph (e)(1)(i) of this section reflecting the revised estimate within three business days of receiving information sufficient to establish that one of the reasons for revision provided under paragraphs (e)(3)(iv)(A) through (C), (E) and (F) of this section applies.
Did you locate this statement “Changed Circumstance: With respect to whether a changed circumstance or borrower requested change can apply to the revision of lender credits, the Bureau believes that a changed circumstance or borrower-requested change can decrease such credits, provided that all of the requirements of § 1026.19(e)(3)(iv), discussed below, are satisfied.” from the preamble?
Thanks!Yes, it is on page 348 of the preamble: https://files.consumerfinance.gov/f/201311_cfpb_final-rule-preamble_integrated-mortgage-disclosures.pdf.
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