An unreleased lien is discovered and the title company must perform additional work to release the lien. Actual costs will vary depending on the length of the extension. 5. 1026.26 Use of annual percentage rate in oral disclosures. Assume consummation is scheduled for Thursday, June 11 and the disclosure for a regular mortgage transaction received by the consumer on Monday, June 8 under 1026.19(f)(1)(i) discloses an annual percentage rate of 7.00 percent: A. For example, in a five-year loan, a creditor would show the payments and loan balance for the five-year term, from 1977 to 1981, with a zero loan balance reflected for 1981. For example, if a mortgage broker receives a consumer's application and provides the consumer with the disclosures required under 1026.19(e)(1)(i), the creditor does not satisfy the requirements of 1026.19(e)(1)(i) if it provides duplicative disclosures to the consumer. The disclosures required by this section need only be made as applicable. For example, if the creditor provides a document showing the estimated monthly payment for a mortgage loan, and the estimate was based on the estimated loan amount and the consumer's estimated credit score, then the creditor must include the statement on the document. 1. If an actual term is unknown, the creditor may utilize estimates using the best information reasonably available in making disclosures even though the creditor knows that more precise information will be available at or before consummation. 1. 1. 1026.55 Limitations on increasing annual percentage rates, fees, and charges. If the initial interest rate will be a discount or a premium rate, creditors must alert the consumer to this fact. The special information booklet may be translated into languages other than English. Requirements for annual percentage rate disclosures are set forth in 1026.38(o)(4), and requirements determining whether an annual percentage rate is accurate are set forth in 1026.22. On Thursday, June 11, the annual percentage rate will be 7.30%, which exceeds the most recently disclosed annual percentage rate by more than the applicable tolerance. Waiting period. Section 1026.19(e)(3)(ii) provides that if the creditor requires a service in connection with the mortgage loan transaction, and permits the consumer to shop for that service consistent with 1026.19(e)(1)(vi), but the consumer either does not select a settlement service provider or chooses a settlement service provider identified by the creditor on the list, then good faith is determined pursuant to 1026.19(e)(3)(ii), instead of 1026.19(e)(3)(i). If redisclosure is required, the creditor may provide a complete set of new disclosures, or may redisclose only the changed terms. If interest rate changes are at the creditor's discretion, this fact must be disclosed. In some cases, a Loan Estimate must be provided under 1026.19(e) before provision of the Closing Disclosure. In addition, the creditor must state the rate limitations used in calculating the maximum interest rate and payment. If the creditor generally conducts separate closings for the construction financing and the permanent financing or expects that the construction financing and the permanent financing may have separate closings, providing separate Loan Estimates for the construction financing and for the permanent financing allows the creditor to deliver separate Closing Disclosures for the separate phases. Intermediary agent or broker. The current version of the booklet can be accessed on the Bureau's Web site, www.consumerfinance.gov/learnmore. If a Rate Lock Extension Fee was incorrectly disclosed on a revised CD as Origination Points, can this be corrected with another revised CD before closing, or corrected on the final consummation CD? If the creditor is scheduled to meet with the consumer and provide the disclosures required by 1026.19(f)(1)(i) on Wednesday, June 3, and the APR becomes inaccurate on Tuesday, June 2, the creditor complies with the requirements of 1026.19(e)(4) by providing the disclosures required under 1026.19(f)(1)(i) reflecting the revised APR on Wednesday, June 3. A revised Loan Estimate may be issued reflecting the increased appraisal fee of $400. (For redisclosures triggered by other events, the creditor must provide corrected disclosures before consummation. A reason for revision has not been established because the creditor reasonably believes that the appraisal report is incorrect. LOCK EXTENSION FEE Y A Zero Tolerance A fee charged by the lender associated with extending a rate lock past the original rate lock contract date. The disclosures could be located on the same web page as the application (whether or not they appear on the initial screen), if the application contains a clear and conspicuous reference to the location of the disclosures and indicates that the disclosures contain rate, fee, and other cost information, as applicable; C. Creditors could provide a link to the electronic disclosures on or with the application as long as consumers cannot bypass the disclosures before submitting the application. For example, assume a creditor defines a class of transactions and uses that class to develop an average charge of $135 for pest inspections. Section 1026.19(e)(1)(vi)(C) provides that the creditor must identify settlement service providers, that are available to the consumer, for the settlement services that are required by the creditor for which a consumer is permitted to shop. Assume consummation is scheduled for Thursday, the consumer received the disclosures required under 1026.19(f)(1)(i) on Monday, and a walk-through inspection occurs on Wednesday morning. The creditor has not exercised due diligence in obtaining the information about the cost of the lender's title insurance policy required under the reasonably available standard in connection with the estimate disclosed for the lender's title insurance policy. For example, the disclosure might state, If any of your payments is not sufficient to cover the interest due, the difference will be added to your loan amount. Loans that provide for more than one way to trigger negative amortization are separate variable-rate programs requiring separate disclosures. To comply with 1026.25, a creditor must retain all documentation used to calculate the average charge for a particular class of transactions for at least three years after any settlement for which that average charge was used. 1. Section 1026.19(f)(2)(iv) requires the creditor to deliver or place in the mail corrected disclosures if the disclosures provided pursuant to 1026.19(f)(1)(i) contain non-numeric clerical errors. At this rate, you'd . Mortgage Rate Lock: An agreement between a borrower and a lender that allows the borrower to lock in the interest rate on a mortgage over a specified time period at the prevailing market interest . For example, the disclosures for a variable-rate program in which the interest rate and payment (but not loan term) can change might read, Your interest rate and payment can change yearly. In transactions where the term of the loan may change due to rate fluctuations, the creditor must state that fact. Modification or waiver. Estimates. 1026.46 Special disclosure requirements for private education loans. You request a mortgage rate lock extension. i. In this case, the creditor does not violate 1026.19(e)(3)(ii) if the actual settlement agent fee exceeds the estimated settlement agent fee by more than 10 percent (i.e., the fee exceeds $330), provided that the sum of all such actual charges does not exceed the sum of all such estimated charges by more than 10 percent (i.e., the sum of all such charges does not exceed $1,100). The creditor then decreases the average charge for the May to August period to account for the lower average cost during the January to April period. The creditor hand delivers the disclosures required by 1026.19(f)(1)(i) on Friday, June 5. For example, the creditor might look to the consumer for the time of consummation, to insurance companies for the cost of insurance, to realtors for taxes and escrow fees, or to a settlement agent for homeowner's association dues or other information in connection with a real estate settlement. A fee is also not considered paid to a person, for purposes of 1026.19(e), if the person retains the fee as reimbursement for an amount it has already paid to another party. The recording fee paid by the consumer is $70. Best information reasonably available. Collection of fees. See comment 19(f)(1)(v)-4 for guidance on how creditors and settlement agents may divide responsibilities for completing the disclosures. If a program is made available only to certain customers of an institution, a creditor need not provide disclosures for that program to other consumers who express a general interest in a creditor's ARM programs. Charges paid by or imposed on the consumer. For purposes of 1026.19(e), a charge paid by or imposed on the consumer refers to the final amount for the charge paid by or imposed on the consumer at consummation or settlement, whichever is later. Section 1026.19(f)(1)(iii) provides that, if any disclosures required under 1026.19(f)(1)(i) are not provided to the consumer in person, the consumer is considered to have received the disclosures three business days after they are delivered or placed in the mail. A creditor may disclose both the historical example and the initial and maximum interest rates and payments. If, at the end of July, the creditor recalculates the average cost from February 1 to July 31, and then uses the recalculated average cost for transactions starting August 1, the creditor complies with the requirements of 1026.19(f)(3)(ii), even if the creditor actually collected more from consumers than was paid to providers over time. A creditor may not delay providing disclosures in transactions involving either a legal agent (as determined by applicable law) or any other third party that is not an intermediary agent or broker. In determining whether or not a transaction involves an intermediary agent or broker the following factors should be considered: A. However, in some cases the initial rate may be higher. The creditor normally may rely on the representations of other parties in obtaining information. 5. 5. However, the assessment will result in a change to an amount actually paid by the seller from the amount disclosed under 1026.19(f)(4)(i). If you let your rate lock expire and pay the current market rate of 4.2%, your monthly payment increases to $978an extra $35 per month. The estimate was based on information provided by the consumer at application, which included information indicating that the subject property was a single-family dwelling. However, if, for example, the disclosure lists the wrong property address, which affects the delivery requirement imposed by 1026.19(e) or (f), the error would not be considered clerical. i. (See comment 19(b)-3 for guidance in determining whether or not the transaction involves an intermediary agent or broker.) For purposes of the disclosures required under 1026.18, the creditor may nevertheless treat the two phases either as separate transactions or as a single combined transaction in accordance with 1026.17(c)(6).
