Loan Disclosure Requirements Quiz

Loan Disclosure and Redisclosure Requirements

• Loan Estimates (LEs) and other initial disclosures must be issued within three business days of application.
• Changes in loan application circumstances may warrant changes to the LE, requiring a redisclosure.
• A legitimate redisclosure is based on changes the lender did not know or could not have known before the original disclosure.
• Examples of such circumstances include lower appraisal values, inability to include irregular income, alternative loan selection, down payment changes, and rate lock requests after the initial LE.

Tolerance Limits and Redisclosure

• Tolerance limits determine the need for LE redisclosure based on cost variances from the original disclosure.
• "Zero Tolerance" applies to lender/affiliate charges or transfer taxes. The only reason for change is a change of circumstance.
• "10% Tolerance" applies to an aggregate total of bona fide third-party charges from lender-recommended providers. Changes exceeding 10% require a change of circumstance and a new disclosure.
• Some differences between disclosed amounts and charged amounts are permitted under TRID (e.g., prepaid interest, insurance, settlement services from non-lender providers).

Revised Loan Estimate Procedures

• A revised LE must be issued at least four days before loan consummation.
• A revised LE cannot be issued on the same day as the initial Closing Disclosure (CD).
• A revised LE cannot be issued after a CD has been issued.
• If a tolerance limit is exceeded without a valid change of circumstance, a lender credit at closing is the solution. If the violation occurs after closing, a refund is due within 60 days and made via credit.

APR Accuracy

• An accurate APR is quoted if it does not exceed 1/8 of one percentage point above or below the initial APR, or .25% for adjustable rate mortgages (ARMs).

Additional Disclosures

• A Commitment Letter details loan approval terms and conditions and is required in some states.
• A Notice of Action Taken is issued by lenders within 30 days of a complete application.
• Loan approval is issued after underwriting and may be notified based on lender policies or state laws.
• Counteroffers occur when a lender can offer a loan on different terms than what was initially applied for.
• Loan denials (adverse action) are usually at the discretion of the underwriter.

Incomplete Applications

• Incomplete loan application files may result in adverse action notifications.
• Applicants must be notified of missing information.
• A reasonable period for them to complete and submit missing information should be given.
• Failure to provide the requested information results in no further consideration for the application. Failure to respond allows the lender to proceed with adverse action procedures.