CFPB TRID Sec. 8 - When are revisions permitted for Loan Estimates?

Compliance > Regulation Z - TILA / TRID Specific > Loan Estimates
Q:  When are revisions permitted for Loan Estimates?
 
A:  Generally, a creditor may revise a Loan Estimate at any time before it provides the Closing Disclosure. A revised Loan Estimate may be issued to reset tolerances for purposes of determining good faith or to update information for informational purposes. (Comment 19(e)(3)(iv)-4). Regardless of whether a revised Loan Estimate is used for resetting tolerances or for informational purposes, all of the disclosures on a revised Loan Estimate must be based on the best information reasonably available at the time the revised disclosure is provided. (Comment 19(e)(3)(iv)-5)
 
The creditor must ensure that the consumer receives the revised Loan Estimate no later than four business days prior to consummation. The creditor is permitted to rely on the charges disclosed in a revised Loan Estimate to reset tolerances in more limited circumstances.
 
Creditors generally are bound by the amounts in the Loan Estimate provided within three business days of the application. Creditors are permitted to provide and use revised estimates for purposes of determining good faith and resetting tolerances only in certain specific circumstances:
 
 
  • Changed circumstances that occur after the Loan Estimate is provided to the consumer cause an estimated charge to increase more than is permitted under the TILA-RESPA Rule (§ 1026.19(e)(3)(iv)(A));
  • Changed circumstances affect the consumer’s creditworthiness or the value of the property securing the loan and cause a consumer to be ineligible for an estimated charge previously disclosed to the consumer(§ 1026.19(e)(3)(iv)(B));
  • Changes to the credit terms or the settlement are requested by the consumer and those changes cause an estimated charge to increase (§ 1026.19(e)(3)(iv)(C));
  • The interest rate was not locked when the Loan Estimate was provided, and locking the rate causes the points, lender credits and any other interest rate dependent charges or terms to change (§ 1026.19(e)(3)(iv)(D));
  • The consumer indicates an intent to proceed with the transaction more than 10 business days after the Loan Estimate was originally provided, so long as the creditor has not established a longer expiration period (§ 1026.19(e)(3)(iv)(E); Comment 19(e)(3)(iv)(E)-2); or
  • The loan is a new construction loan, and settlement is delayed by more than 60 calendar days, if the original Loan Estimate states clearly and conspicuously that at any time prior to 60 calendar days before consummation, the creditor may issue revised disclosures. (§ 1026.19(e)(3)(iv)(F))
 
Additionally, if a creditor provides a revised Loan Estimate for informational purposes, any updated fees, although required to be updated based on the best information reasonably available requirement, cannot be used for determining good faith unless one of the above circumstances for resetting tolerances is also present. (Comment 19(e)(3)(iv)-5)
 
Revisions can also be provided on the Closing Disclosure. For information about providing Closing Disclosures, including providing a Closing Disclosure to reset tolerances, see sections 10, 11, and 12 below (in the Bureau’s compliance guide).
 
Note:  When creditors revise estimated charges for these reasons, a creditor may determine good faith based on increased charges only to the extent actually justified by the reason for the revision. (Comment 19(e)(3)(iv)-2). Creditors must also retain records demonstrating compliance with the requirements of § 1026.19(e), in order to comply with the record retention requirements of the TILA-RESPA Rule. (Comment 19(e)(3)(iv)-3)
 
 
This Loan Estimate / LE information can be found in the CFPB's TILA-RESPA Integrated Disclosure rule compliance guide - http://www.consumerfinance.gov/regulatory-implementation/tila-respa/
 

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