Are you delaying closing unnecessarily? (Define "product" change for TRID compliance)
TRID requires a new 3-day waiting period when the loan product is changed(note also when APR changes). But what do they mean by "product"? Let's discuss what it means and (more importantly), what it does not mean - as we suspect lenders may be delaying closing in some cases where they don't need to.
Loan Scenario You deliver a Closing Disclosure to a mortgage borrower on Monday, with plans to close on Friday. The product is a 30-year fixed rate loan through a state housing agency. On Wednesday, something changes with the loan (maybe the borrower no longer qualifies with this investor, of maybe the borrower wants to change to an ARM). Underwriting approves the change and you disclose a revised Closing Disclosure on Thursday. Can we close on Friday or is a new 3-day waiting period required?
Answer The simple rule is this: If the "product" on page 1 of the Closing Disclosure is changed, then that qualifies as changing the "product" for purposes of determining whether a new 3-day waiting period is required. And if there is no product change if that portion of the CD doesn't need to change. The rule for how to disclose this on page 1 is the same as the test for whether a new waiting period occurs.
See the picture:
Examples: Does NOTcount as changing the "product" (no 3-day waiting period required):
Change from FHA to conventional
Change from conventional to state housing agency
Increase loan term from 20 to 30 years
Change from home equity to refinance (i.e. decided to payoff existing lien)
Switch from no cash out refinance to cash out refinance
DOES count as changing the product:
Change from fixed to an ARM
Change from 3/1 Adjustable Rate to 5/1 Adjustable Rate
Change from 5/3 to 5/1
And that's all folks!
**For those going extremely deep into these rules, note that the CFPB's website "e-regulations" contains a typo that muddies the water on this issue. Check the Federal Register or other official source to verify that the information cited in this newsletter is correct.**
In Other News
Want to dig into the hottest regulatory issues with a group of other risk officers? Sign up here for the MBA's Risk Manager's Forum or drop me an e-mail. Our second session is tomorrow.
Maybe some relief from Fair Credit Reporting lawsuit concerns? The US Supreme Court issued a decision in Robins v Spokeo, with Anthony Sharett explaining that, "In practical terms, the Supreme Court decision means that a consumer cannot sue companies, including mortgage lenders and servicers, under the FCRA for mere technical violations of the law."
SCA excited to have three new employees starting next week: Lance McGrath in systems consulting and Julie Thibodeau and Cheryl Kennedy in Quality Control.
Trying to drive change at your organization? Have an idea that things could be done better? How about this advice from "For Your Improvement" by Michael Lombardo and Robert Eichinger: Focusing on the negative? Bring a solution if you can. Nobody likes a critic. Everybody appreciates a problem solver. Give people ways to improve; don't just dump and leave. Tell others what you think would be better -- paint a different outcome.
"Indecision is the thief of opportunity." ~ Jim Rohn, 20th century business philosopher
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