Know Before You Owe (KBYO or TRID)

No. See the response to the previous question regarding valid changes of circumstance. The mortgage broker should elect not to place a creditor’s name or Loan ID on the Loan Estimate if the creditor is unknown or if they believe a change in creditor is a possibility.

Yes, with a valid changed circumstance under certain conditions and timing. Commentary ¶19(e)(4)(ii) states: “If, however, there are less than four business days between the time the revised version of the disclosures is required to be provided pursuant to §1026.19(e)(4)(i) (revised Loan Estimate) and consummation, creditors comply with the requirements of §1026.19(e)(4) if the revised disclosures are reflected in the disclosures required by §1026.19(f)(1)(i) (Closing Disclosure).”

No. A revised Loan Estimate cannot be provided on or after the date the Closing Disclosure has been delivered.

An initial or revised Loan Estimate must be provided in good faith. If a creditor uses a revised Loan Estimate for the purpose of determining good faith, Regulation Z says the creditor must provide a revised version of the Loan Estimate within three business days of receiving information sufficient to establish a changed circumstance, not a portion of the revised Loan Estimate. A Loan Estimate is in good faith if it is consistent with 1026.17(c)(2)(i). 1026.17(c)(2)(i) provides that if any information necessary for an accurate disclosure is unknown to the creditor, the creditor shall make the disclosure based on the best information reasonably available to the creditor at the time the disclosure is provided to the consumer. The “reasonably available” standard requires that the creditor, acting in good faith, exercise due diligence in obtaining information.

We recommend you discuss this issue with your in-house compliance experts or outside counsel. The actual total amount of lender credits, whether specific or non-specific, provided by the creditor that is less than the estimated “lender credits” is an increased charge to the consumer for purposes of determining good faith. Comment 19(e)(3)(i)–5 provides illustrations of these requirements as well as §1026.19(e)(3)(iv)(D) and comment 19(e)(3)(iv)(D)–1. With respect to whether a changed circumstance or borrower requested change can apply to the revision of lender credits, the Bureau stated in the Section-by-Section Analysis of the Final Rule that “a changed circumstance or borrower-requested change can decrease such credits, provided that all of the requirements of § 1026.19(e)(3)(iv) are satisfied.” Without a valid changed circumstance, the Bureau declined to provide a specific exemption that would allow the amount of lender credits to decrease so that the creditor would be able to stay within guidelines under streamlined refinancing programs that limit the amount of cash that the creditor could pay the consumer at closing. The CFPB stated in the Section-by-Section Analysis of the Final Rule that “lenders are not permitted to reduce the lender credits they provide to the borrower under current Regulation X. See HUD RESPA FAQs p. 27, # 4 (“GFE-Block 2”). Under current Regulation X, the loan originator may only apply the amount of the excess lender credits to additional closing costs previously not anticipated to be included in the loan, apply the excess to a principal reduction to the outstanding balance of the loan, pay the consumer the excess in cash, or reduce the interest rate and the credit accordingly. Creditors will be able to take the same actions with respect to lender credits in streamlined refinancing programs under this final rule.”

Closing Disclosure, with a valid changed circumstance and specific timing. Commentary ¶19(e)(4)(ii) states: “If, however, there are less than four business days between the time the revised version of the disclosures is required to be provided pursuant to §1026.19(e)(4)(i) (revised Loan Estimate) and consummation, creditors comply with the requirements of §1026.19(e)(4) if the revised disclosures are reflected in the disclosures required by §1026.19(f)(1)(i) (Closing Disclosure).”

The creditor must refund the excess to the consumer no later than 60 calendar days after consummation. Also, see the previous question regarding decreasing a lender credit.

No. Valid reasons for a revised Loan Estimate include:

• (A) Changed circumstance affecting settlement charges
  • Example: Appraisal Fee to Affiliate
• (B) Changed circumstance affecting eligibility
  • Example: Ineligible for Loan Program
• (C) Revisions requested by consumer
  • Example: Power of Attorney
• (D) Interest rate dependent charges
  • Example: Initial LE with no rate lock
• (E) Expiration of initial Loan Estimate
  • Example: Intent to Proceed on Business Day 11
• (F) Delayed settlement date on construction loan
  • Example: Settlement expected to occur more than 60 days after initial LE and statement provided on initial LE