September 8, 2015 at 12:55 pm EDT #8087kowsleyMember
The following questions were presented during the Compliance Masters Group sessions on September 3rd and 4th.
1. What happens when we under disclose the recording fees and we as the bank pay for the additional charge. Are we required to issue a new CD?
No, there is no requirement to reissue the Closing Disclosure if the bank is paying the additional charge as the regulation states in 1026.19(f)(2)(iii) – If during the 30-day period following consummation an event occurs that causes the Closing Disclosure to become inaccurate, and results in a change to an amount actually paid by the consumer from that amount disclosed in the Closing Disclosure then deliver or place in the mail corrected disclosures not later than 30 days after receiving information sufficient to establish that such event has occurred.
If the change didn’t result in a change to an amount actually paid then there is no requirement to redisclose.
2. Do we have to issue a CD showing the correct amount within 30 days, then another CD reflecting the tolerance along with the check within 60 days?
No, based on 1026.19(f)(2)(v), if amounts paid by the consumer exceed the tolerances the creditor complies with this section if the creditor: 1. Refunds the excess to the consumer no later than 60 days after consummation; and 2. delivers or places in the mail corrected disclosures that reflect such refund no later than 60 days after consummation.
The 30 day requirement comes into play when the creditor has disclosed an amount that results in a change to an amount actually paid by the consumer from that amount disclosed in the Closing Disclosure. In this case, the corrected disclosure must be delivered or placed in the mail not later than 30 days after receiving information sufficient to establish that such event has occurred.
So, if a tolerance issue, you have 60 days, if just a change in amount originally disclosed it is 30 days. If it is a non-numeric clerical error it is 60 days.
3. So we can compare tolerances on an initial CLOSING Disclosure to the final CLOSING Disclosure? We don’t have to compare final CD to the last Loan Estimate on file? (re: initial closing discl issued 12/22)
If you have to make revisions to the Closing Disclosure you would compare actual charges to the borrower to the last Closing Disclosure provided prior to closing for tolerance purposes. Very different from what we have done in the past.
A creditor may not provide a revised LE on or after the date on which the creditor provides the CD. The consumer must receive a revised version of the LE no later than four business days prior to consummation. If there are less than four business days between the time the revised version of the LE is required to be provided and consummation, creditors comply if the revised disclosures are reflected in the CD.
4. There’s a question floating around as to whether real estate tax and homeowner association dues should be disclosed on the Loan Estimate. I contend that on a purchase loan, those items will not be known “at application” and should not be included on the Loan Estimate, unless actually known. I fully understand that they will be included on the Closing Disclosure and pro-rated. I was just wondering what you opinion might be? My client’s concern is that the “cost to close” will not be an accurate representation until the closing disclosure is issued.
I saw the BOL blogs and John Burnett’s opinion:
Taxes and assessments paid by the seller in advance are covered by 38(j)(1)(vii), (viii) and (xi), and go on the Closing Disclosure under the Adjustments for Items Paid by Seller in Advance heading in Section K. They don’t go on the Loan Estimate as a separate entry. If they are known at the time the LE is issued, however (because they are cited in the contract for sale, for example), they would be included in the amount on the Adjustments and Other Credits line of the Calculating Cash to Close table if they are amounts the borrower is expected to pay at closing.
Kelly Owsley: I agree with John Burnett’s conclusion keeping in mind that while it may not be known at application in order to appear on the initial Loan Estimate, it is certainly allowed to be considered as a changed circumstance once the contract is received or additional information not relied upon is received. A revised Loan Estimate could be issued at that time and the accurate cost to close would be included.
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