[TheBank]

IF the bank provides an LE, the LE has been received by the customer in the mail, the LE expires, and no intent to proceed has been received, would it be correct to say that any fee then at that point could be increased because there would be no tolerance set point/no fees to adhere to at that point? In other words, we could then provide a revised/2nd LE with potentially all new fees because the first one expired?

If yes, then is there a requirement or expectation for the lenders to educate the consumer on the expiration of the LE?

Is there an issue if ITPs are frequently given late in the process? Is there a requirement or expectation of TRID/UDAAP that the ITPs should be obtained closer to the receipt of the LE?

We have had an issue with a lender not getting ITPs very timely, and in some cases this has benefitted the bank because the LE expired. What risk do we have here?

[jholzknecht]

Section 1026.19(e)(3)(iv) of Regulation Z provides that a revised disclosure is permitted and tolerance may be reset after the expiration period has expired and the consumer has not indicated an intent to proceed. The fees in the revised disclosure may have changed from the original disclosure.

Beyond providing a LE that includes an expiration date there is no requirement to educate the borrower on the expiration date. Most creditors follow up with the borrower, often several times, after delivery of the LE to encourage them to provide intent to proceed.

Most creditors provide the intent to proceed form at the time they provide the LE. If you are providing the form late in the process then that delays the whole lending process since fees can not be imposed until you have received the borrower’s intent. It also increases the likelihood that you will have to provide a revised disclosure. UDAP could be a concern if a lender is intentionally delaying delivery of the intent to proceed form with the intent to increase the likelihood that the LE will expire and a new LE with higher fees would be delivered.

The easiest solution is to deliver the intent to proceed form with the LE and to perform rigorous follow up to obtain the borrower’s intent to proceed before the LE expires.

[Author]

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