Changed circumstances: A refresher

With interest rates at historic lows, many members are buying new homes or refinancing. Add in COVID-19 and the increase in technology, and many things may change during the transaction. Here’s a short refresher on changed circumstances and when a credit union can provide the member with revised disclosures.

Section 1026.19(e) requires a credit union to provide a good faith estimate of closing costs (the Loan Estimate, or LE). Section 1026.19(e)(3) states that an estimated closing cost disclosed is in good faith if the “charge paid by or imposed on the consumer does not exceed the amount originally disclosed under [the initial LE].” As explained in CFPB’s TILA-RESPA Integrated Disclosure rule Small entity compliance guide, “whether or not a Loan Estimate was made in good faith is determined by calculating the difference between the estimated charges originally provided in the Loan Estimate and the actual charges paid by or imposed on the consumer in the Closing Disclosure.”

Section 1026.19(e)(3)(iv) states that a credit union “may use a revised estimate of a charge instead of the estimate of the charge originally disclosed… if the revision is due to… [a] changed circumstance affecting settlement charges.”  The regulation provides 4 types of changed circumstances, which if any occur will allow the credit union to send a revised loan estimate (LE) to reset tolerances:

1. Section 1026.19(e)(3)(iv)(A) would allow the credit union to provide a revised loan estimate when there is an increase in settlement charges when “information specific to the consumer or transaction that the creditor relied upon when providing the [initial LE] … was inaccurate or changed after the disclosures were provided.”

 

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