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Rate Lock

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  • #33230
    KerriMartin
    Participant

    We are looking to change our rate lock process with our customers for our secondary market product. I need to make sure we have everything in place and we are in compliance. We currently lock our rate with our customer at application for 45 days. We use the loan estimate to disclose the rate lock information. We are looking to change to locking the rate with the customer once the appraisal and title commitment is received in the loan admin department. Should we use a separate form to lock the rate? Should we re-disclose the loan estimate and enter the rate lock information on it? Or Both? I understand that we would need to re-disclose anyhow if the rate is different from the time we initially prepared the loan estimate. But if the rate is the same, would we necessarily need to re-disclose? Do you have any additional information I should consider if we change the rate lock process?

    #33238
    rcooper
    Keymaster

    Take a look atthe commentary to 1026.19(e)(3)(iv)(D) https://www.consumerfinance.gov/rules-policy/regulations/1026/19/#e-3-iv-D.

    Regulation Z oreferences rate locks as those executed through a rate locked agreement, therefore, we believe you should have a separate rate lock agreement. Once you lock the rate you have three business days (general) to issue a revised loan estimate. Also, take a look at preamble discussion from the TRID final rule on pages 379 and 697 of the final rule. https://files.consumerfinance.gov/f/201311_cfpb_final-rule_integrated-mortgage-disclosures.pdf.

    1026.19(e)(3)(iv)
    (D) Interest rate dependent charges. The points or lender credits change because the interest rate was not locked when the disclosures required under paragraph (e)(1)(i) of this section were provided. No later than three business days after the date the interest rate is locked, the creditor shall provide a revised version of the disclosures required under paragraph (e)(1)(i) of this section to the consumer with the revised interest rate, the points disclosed pursuant to § 1026.37(f)(1), lender credits, and any other interest rate dependent charges and terms.

    Even if the rate is not changing you shoud reissue the LE reflecting the rate lock information. See page 101 of the 2017 TRID amendment https://files.consumerfinance.gov/f/documents/201707_cfpb_Final-Rule_Amendments-to-Federal-Mortgage-Disclosure-Requirements_TILA.pdf, where you’ll find the excerpt stated below.

    “As noted above, § 1026.19(e)(3)(iv)(D) explicitly
    requires the creditor to provide a revised Loan Estimate when the initial Loan Estimate did not
    disclose an interest rate subject to a rate lock agreement, even if the terms and charges disclosed
    are the same.”

    Let us know if you have any other questions.

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