[Understudy]

I’m looking for some guidance. We have a loan that was conditionally approved as a fixed rate. Shortly after conditional approval the borrowers asked to switch to an ARM product – which was disclosed using a new Loan Estimate. After the new Loan Estimate was issued the borrowers advised us they were going with another lender thus rendering the loan approved not accepted. Do we report the Interest Rate (and associated Rate Spread) from the last LE issued to the borrower even though those were not the terms they were approved at?

[rcooper]

Tough call. The Compliance Resource team’s thoughts are if the action taken is “approved but not accepted” then report the rate and rate spread based on LE, since no CD provided. If action taken is “withdrawn” the rate and rate spread are reported as N/A.

We assume the app is treated as a single transaction. Both the fixed and variable rate loans have the same ULI. If treated as two apps (different ULIs) then the first was approved but not accepted and the second was withdrawn.

Our best guess is they handled the transaction as a single app, so report action taken as “withdrawn”, and report the rate and rate spread as N/A. If they handled the transaction as two apps then report the action taken on the first app as “approved but not accepted” with the rate and rate spread based on LE, since no CD provided. The action taken on the second app would be “withdrawn” and the rate and rate spread would be reported as N/A.

[Understudy]

Thank you so much for your response. It is a single transaction so I will report the interest rate and spread from the last LE.

[Author]

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