[kk1218]

When should we redisclose for a rate lock extension fee? For example, if a customer locks a rate for 45 days and on day 44 we know we will not close and will need to extend the rate lock, should we reissue the LE with an estimated rate lock extension fee at that time or wait until we know the closing date (and therefore the exact amount of the fee) to redisclose? Would this be considered a changed circumstance?

[jholzknecht]

You are allowed to provide a revised loan estimate at any time. But if your goal is to provide a revised loan estimate and to be able to adjust the tolerance, thereby avoiding a cure, then the revised disclosure must be due to a changed circumstance or a an interest rate lock to name two of the five scenarios listed in Section 1026.19(e)(3)(iv) under which tolerance adjustments are allowed. This could qualify as a changed circumstance, which includes new information specific to the transaction that you did not rely on when providing the original loan estimate. The interest rate lock is not such a good fit since it is allowed if the points or lender credit change because the interest rate was not locked when the original loan estimate was provided.

If you go with the changed circumstance option, the revised disclosure must be provided with in three business days (general rule) of receiving sufficient information to establish a valid reason for issuing a revised disclosure.

[kk1218]

Could a rate lock extension fee be considered a borrower requested change?

[jholzknecht]

There is no example that indicates that a rate lock extension fee is an example of a borrower requested change, and at the same time there is no statement that disqualifies the item. It is a bit of a stretch, but if you are going to proceed on this basis add a memo to the file explaining that the borrower requested the extension and that a revised disclosure is provided to reflect the borrower requested change.

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