For years, financial institutions have struggled with how to disclose the expiration date for estimated fees on a Loan Estimate when a new Loan Estimate is issued. Well, the latest amendments to TRID has clarified this for us, and it is probably not what you expected to hear.
History of Expiration Date for Fees
The first version of TRID left the compliance world wondering how to complete the expiration date for a revised Loan Estimate if the applicant had already provided an intent to proceed. As the original version of TRID didn’t address this topic at all, compliance professionals had to make their best guess and did so based on previously issued guidance from HUD. Prior to the Loan Estimate, the Good Faith Estimate (GFE) had a similar field of “important dates” which listed the date that any proposed fees would be good through. HUD provided the following guidance on how to complete the important dates section on a revised GFE when the applicant had already expressed an intent to continue with the application:
Q: If a revised GFE is provided due to changed circumstances or a borrower requested change, must a loan originator complete Line 2 in the “Important Dates” section on the revised GFE if the shopping period has ended and the borrower has already expressed intent to continue with the application?
A: Yes, the loan originator must complete Line 2 in the “Important dates” section with the same date from the last GFE. The borrower is not required to re-indicate the intent to proceed with the revised GFE because the borrower has previously expressed an intent to move forward with the transaction.
Based on this guidance and without any new guidance under TRID v1.0, the consensus among compliance professionals was to list the original date from the first Loan Estimate on any revised Loan Estimate, even if the date was in the past. While this practice could be confusing for consumers, this practice was the best attempt to comply with the new guidance by utilizing the existing guidance.
Expiration Date for Revised Loan Estimates Under TRID v2.0
The new TRID amendments have clarified what to do with the date field on revised Loan Estimates after an applicant has provided their intent to proceed. In short, the amendments to Regulation Z make it clear that the date and time at which the estimated closing costs expire should be left blank for any revised Loan Estimates where the applicant has indicated their intent to proceed within the time specified on the original Loan Estimate. Specifically, a new comment (#4) was added to the commentary to part 1026.37(a)(13) which states the following:
“Revised disclosures. Once the consumer indicates an intent to proceed within the time specified by the creditor under 1026.37(a)(13)(ii), the date and time at which estimated closing costs expire are left blank on any subsequent revised disclosures. The creditor may extend the period of availability to expire beyond the time disclosed under 1026.37(a)(13)(ii). If the consumer indicates an intent to proceed within that longer time period, the date and time at which estimated closing costs expire are left blank on subsequent revised disclosures, if any."
The preamble to the final rule expands on this by stating the following:
“...the Bureau notes that new comment 37(a)(13)-4 was intended to provide guidance with respect to expiration-date disclosures on any revised Loan Estimates provided once a consumer has indicated an intent to proceed.”
Expanding on this, the preamble states that “once the consumer has expressed an intention to proceed, the expiration date is moot for the purposes of the Loan Estimate, as the amounts disclosed provide the applicable baseline for the good faith tolerance requirements under 1026.19(e)(3). Accordingly, the disclosure of the expiration date on revised loan Estimates provided after the consumer indicates an intention to proceed does not change the validity of the charges disclosed on the Loan Estimate.”
Therefore, the bottom line with this amendment is that all subsequent LEs that are issued after an applicant provides their intent to proceed will not list a date or time in which the estimated closing costs expire - meaning that the date is left bank. (Remember, NA is never used on the LE, so a blank entry is the correct method.) As many institutions have had a practice where they list the date from the original LE, this will be a change in procedures for most Financial Institutions.
It is also worth noting that since many auditors and examiners wrote many banks up for not using the date from the prior LE on revised LEs, you can fully expect this to be a hot topic in the near future.
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