[Annmichele]

We did a loan estimate and then later received the appraisal back and it was higher then we expected, which made our customers LTV lower. On our rate sheet when the LTV is low we lower our customer’s rate. Due to the lower rate this made the loan no longer an HPML which means we don’t have to escrow. On the Loan Estimate it shows that we are going to escrow and now on the Closing Disclosure we don’t have to escrow. Does this fall under a change circumstance where we need to do a revised LE and wait the three days? Thanks!

[rcooper]

I think this would qualify as a changed circumstance (comment 1026.19(e)(4)(i)-3 discusses appraisal value different than expected). It sounds like you may have already provided the CD. If that is the case you can not provided a revised LE; your changes would be reflected on the CD.

Comment 1026.19(e)(4)(ii)-1:
Section 1026.19(e)(4)(ii) also requires that the consumer must receive any revised version of the disclosures required under § 1026.19(e)(1)(i) no later than four business days prior to consummation, and provides that if the revised version of the disclosures are not provided to the consumer in person, the consumer is considered to have received the revised version of the disclosures three business days after the creditor delivers or places in the mail the revised version of the disclosures. See also comments 19(e)(1)(iv)-1 and – 2. However, if a creditor uses a revised estimate pursuant to § 1026.19(e)(3)(iv) for the purpose of determining good faith under § 1026.19(e)(3)(i) and (ii), § 1026.19(e)(4)(i) permits the creditor to provide the revised estimate in the disclosures required under § 1026.19(f)(1)(i) (including any corrected disclosures provided under § 1026.19(f)(2)(i) or (ii)).

And here is a specific example from the commentary that may be helpful:
ii. Consummation is scheduled for Thursday, June 4. The creditor hand delivers the disclosures required by § 1026.19(f)(1)(i) on Monday, June 1, and, on Tuesday, June 2, the consumer requests a change to the loan that would result in revised disclosures pursuant to § 1026.19(e)(3)(iv)(C) but would not require a new waiting period pursuant to § 1026.19(f)(2)(ii). Under § 1026.19(f)(2)(i), the creditor is required to provide corrected disclosures reflecting any changed terms to the consumer so that the consumer receives the corrected disclosures at or before consummation. The creditor complies with the requirements of § 1026.19(e)(4) by hand delivering the disclosures required by § 1026.19(f)(2)(i) reflecting the consumer-requested changes on Thursday, June 4.

If you’re redisclosing a CC on the CD, but the rule of ensuring receipt 3 business day before consummatoiin for revised CD aren’t met (APR becomes inaccurate/product changed/prepayment penalty added), then you’d comply by providing corrected disclosures at or before consummation.

Let me know if I’ve misunderstood anything.

[Annmichele]

Thank you for your help! Let me go a little further. If a loan is an HPML at Loan Estimate time which requires escrow but at the time of the CD its is not an HPML (no escrow) does that require a re-disclosure of an LE before issuing a CD. Thank you again!

[rcooper]

There isn’t anything that I’m aware of that speaks to this specifically or that leads me to think that redisclosure is required… it doesn’t sound like the fees will increase so you aren’t looking to reset tolerance, and the escrow fees aren’t a problem either way because they’re unlimited and they aren’t being charged, you haven’t mentioned a rate lock, it isn’t a change requested by the customer. So, I don’t think a revised LE would be required, but you can certainly provide an revised estimate for informational purposes. In this case I think it would be a good idea since you had informed the borrow they would have an escrow and now they will not… Make sure you document your communication about that every chance you get… you want to make sure they understand they won’t be paying in for taxes and insurance.

[Annmichele]

Thank you Robin!

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