Am I reading the rule correctly? If we lock a rate or extend a rate lock and nothing on the Loan Estimate changes, we don't have to issue a revision? This is unlike the current GFE rule that says we have to redisclose every time a rate is locked or the lock is changed?

If the interest rate was not locked when the Loan Estimate Disclosure was provided, a revised version MUST be provided when the interest rate is subsequently locked. This is required even if the interest rate dependent charges do not change as a result of the lock. See §1026.19(e)(3)(iv)(D) for further details. The new rule is the same as the current GFE/HUD rule.

Additionally, the delivery timing requirement was just revised. No later than three business days (general) after the date the interest rate is locked, the creditor shall provide a revised version of the disclosures… [Commentary to §1026.19(e)(3)(iv)(D)]

Jared, the reference you cited states that when the rate is locked after disclosing you must re disclose the revised rate. What if the rate is the same though? My understanding was that under the new rules we only issue a revised Loan Estimate if the rate changes. Is that not correct?

I also have a question on this. If a rate lock has expired, are we required to redisclose if the interest rate will not change?

1026.19

(e) Mortgage loans secured by real property—early disclosures.

(1) Provision of disclosures.

(i) Creditor. In a closed-end consumer credit transaction secured by real property, other than a reverse mortgage subject to § 1026.33, the creditor shall provide the consumer with good faith estimates of the disclosures in § 1026.37.

1026.37

(13) Rate lock. A statement of whether the interest rate disclosed pursuant to paragraph (b)(2) of this section is locked for a specific period of time, labeled “Rate Lock.”

(i) For transactions in which the interest rate is locked for a specific period of time, the creditor must provide the date and time (including the applicable time zone) when that period ends.

(ii) The “Rate Lock” statement required by this paragraph (a)(13) shall be accompanied by a statement that the interest rate, any points, and any lender credits may change unless the interest rate has been locked, and the date and time (including the applicable time zone) at which estimated closing costs expire.

Also see the Commentary to 1026.37(a)(13).


If you do not issue a revised GFE LE when the rate is locked, extended or renewed you cannot meet the requirements of 1026.37.(a)(13).

But to respond directly to the question, Dan, would you agree that the expiration of the rate lock would not trigger a new Loan Estimate requirement?

Well I was responding to M&m lover and kind of skipped right over BradK's question. Sorry.

Yes, I would agree that a revised LE would not be required if the rate lock expires. However if they extended or renewed the rate lock, even if the rate did not change, then a revised LE would be required.

Aha, that makes your response make more sense to me. Thanks, Dan.

However, what if the expiration of the rate lock impacted other fees?

I'm not sure how the rate lock expiring would impact other fees if the rate will not change, or at least I can't think of one in our world, but if for some reason the rate lock expiration did impact a fee that would be a changed circumstance IMO allowing them to issue a revised LE if they needed to cover any potential tolerance issue.

That's just a quick off the top of my head opinion.

It would have to be a fee directly affected by the expiration, not one that just happens to have changed.

Dan - yes you're probably correct. I was trying to think of an example that if the locked rate was 4% and since the lock expired and the now current rate was 4% + 1 point that would cause the origination fee to rise, but it would default to the then par rate rather than with one point. Sometimes it doesn't pay to think that hard

A little confused by the language in the commentary to §1026.19(e)(3)(iv)(D). If the rate is not locked and we never lock the rate but the rate never changes would we have to issue a revised loan estimate? This almost makes it sound as if you must lock the rate at some point prior to closing.

If you don't lock the rate via a written agreement between you and the consumer your rate lock section will always state no. Additionally, you would not encounter a changed circumstance relative to a rate lock unless there is a written agreement between you and the consumer (therefore no revised loan estimate trigger).

Rate locks via the preamble:

…where a creditor has a policy to honor the quoted rate, but does not lock the rate pursuant to a written agreement with the consumer, the creditor would disclose ``no''… The Bureau believes this disclosure is appropriate to aid the consumer's understanding of the transaction, because the creditor would not be bound by an agreement to provide the interest rate to the consumer at consummation. [Federal Register 12/31/13 page 79919]

Thanks Jerod. So the only instance in which a "floating rate" Loan Estimate would need to be redisclosed based on a rate change is when a change in the interest rate impacts interest rate dependent charges?

I think I can go along with that. However I'm going to throw the caveat that we should always be cautious of using phrases like "only instance" in relation to new requirements/rules.

I'm confused. If the rate lock expires, wouldn't the only reason you would want to redisclose be that the borrower still wants to do the loan so you're either relocking or extending and a new LE would be required the same way a redisclosed GFE is now required?

Second question: Is a signed rate lock agreement between the borrower and the bank a requirement as of 8/1/15?

Truffle:

The rate lock re-disclosure requirements on or after 8/1 will be the same as they are today.

You don't have to require a written agreement to lock rates but you'll only disclose that the rate is locked if you have a written agreement between you and the consumer.

That doesn't make sense. Why is a written agreement between you and the consumer required to do a rate lock? I've had this discussion on BOL before. If the borrower calls and says 'lock me today at this rate' we do it and redisclose. Heck, that's what I just did on my refi a couple weeks back. There's no written agreement required that I know of. But the rate was locked by the consumer so they must get the redisclosure, right?

Because the preamble to the rule says a written agreement is required.

…where a creditor has a policy to honor the quoted rate, but does not lock the rate pursuant to a written agreement with the consumer, the creditor would disclose ``no''… The Bureau believes this disclosure is appropriate to aid the consumer's understanding of the transaction, because the creditor would not be bound by an agreement to provide the interest rate to the consumer at consummation. [Federal Register 12/31/13 page 79919]

Try to look at it from the Consumer Financial Protection Bureau standpoint. The consumer is more protected if a rate lock is disclosed as being locked only when a written agreement is in place. In other words absent a written agreement you could pull the rug out from under the consumer anytime you want.

I understand what you're saying and it makes sense. But then I believe the answer to my question is that a signed rate lock agreement between borrower and bank IS required if you're going to lock the rate beginning 8/1/15.

Otherwise I'm taking it to mean the bank can float the rate right up to the closing and the borrower might or might not get the rate shown on their LE.

Thanks for taking the time to work this part out with me. I'll have to change our procedure to stop taking verbals and get signed agreements in our files.

Glad to help out. You can still verbally lock with the customer for whatever that's worth to the consumer but you can't disclose that the rate has been locked unless there's a written agreement. That said doing so may be quite confusing the consumer. It could go something like this:

Consumer: Wait you told me on the phone that the rate was "locked" but the disclosure says it's not, what gives?

Bank: Nevermind what the disclosure says, you have my word.

There could be some interesting discussions for those that choose to continue to lock rates without a written agreement. Good luck!

That was my take-away but I needed some confirmation before I upset the LOs' apple carts. They're going to love me by 8/2!