We have a newly added co-borrower requesting all early disclosures along with the LE be re-disclosed with their name added as well. I have tried to advise the team it wouldn't be necessary to go back and do additional early disclosures for the co-borrower since the primary borrower was already provided the disclosures. However, we now have a change in the loan amount (borrower request). Would we be out of line for generating the early disclosures for the co-borrower along with generating a new LE reflecting the new loan amount along with the co-borrower?

Close the original application as withdrawn and start anew. It's probably the easiest thing to do.

I would not re-disclose unless a valid CC occurred. For us, the credit report fee for a 2nd borrower increases a zero tolerance item when the applicant is added. Thus, a valid CC and redisclosure is required. Or you can do what Randy recommended and start a new app. Just my opinion. Thanks!

As much as I would love to start anew, the loan officer is not wanting to go that direction. Would there be any regulatory-repercussions should we regenerate the disclosures?

No.

How can you call it a withdrawn if the borrower never stated a desire to withdraw the loan?

They withdrew their original single applicant application and are submitting a multiple applicant application.

I guess you could make a case for that, but in the eyes of the borrower, they are likely just looking to "add-on" to the existing application. They may be confused by getting an Adverse Action notice stating that the loan is Withdrawn. If the additional borrower is just "because" and not do to a credit related issue with the primary borrower, then I would just continue the existing application and provide the additional disclosures as applicable.

They may be confused by getting an Adverse Action notice stating that the loan is Withdrawn.

Huh??? What adverse action?

Some places will send out the notice when they use such an action to clear the loan out of the system. It's automatic with some systems unless one remembers to specifically exclude from doing so. When you code a Withdrawal in our LOS, it generates an AAN.

Those are the types of "nice ideas," Justin, that people dream up as customer service enhancements (in this case, confirming with the borrower that s/he withdrew an application, or perhaps to document the file) that can come back to bite you when do one remembers it's not a required notice.

Yep, I agree.

My bank, too, sends out the "withdrawn notice" to the applicant....more as file documentation than anything else. I would prefer to just add the Notice to the file and NOT send it to the applicants......but not my decision to make. But we do NOT refer to it as an Adverse Action Notice. The notice we send is a "custom" document created in LaserPro. I don't think it's a document in the LaserPro library. For Mortgages, we use Calyx Point. The notice from that software looks just like the software's AAN but the title of both documents is "Notice of Action Taken." For withdrawn files, Calyx includes a box to check that states "withdrawn" in the list of denial reasons.

Where we are off track here, is that this notice is sent to applicants who apply but then "disappear"...won't return the calls, etc, we make to find out if the applicant is still interested in obtaining the loan....guessing we should be sending a "denied for incompleteness" for these? These files are in a "conditional approval" status since nothing found in the application or on the credit report warrants a denial.

Depends, Swiggles. If they are in conditional approval and the only thing left that you are conditioning for still are items related to the closing, then you would Action these as "Approved, not Accepted," if you had credit related things that were still conditioned for you would have likely did a Notice of Incompleteness for such items. If they disappear at that point, then these would be "Incomplete."

Telling a customer that you consider their application withdrawn has nothing to do with whether a bank needs to consider the application as approved but not accepted. Apples and oranges.

I get so many opinions on this....makes my head spin. A conditional approval isn't an approval. If I can't get the applicant to bring in tax returns for verification, then I would have to deny for incompleteness. Management here, would not be interested in sending a list of needed items with a deadline for submission....thus causing extra deadline monitoring and headaches.

12 CFR 1003.4(a)(8) -- Comment #4

Action taken—conditional approvals.

If an institution issues a loan approval subject to the applicant's meeting underwriting conditions (other than customary loan commitment or loan-closing conditions, such as a clear-title requirement or an acceptable property survey) and the applicant does not meet them, the institution reports the action taken as a denial.

The above items are the types of things that you would code an application as "Approved not Accepted." If all that is left to do are customary "loan commitment" or "loan-closing" conditions, then if they disappeared at that point it would be Approved not Accepted. If you are unable to make a final credit decision without verified tax returns, then that would be a denied for Incompleteness if you sent a NOI and the customer disappeared.

The discussion has veered off course. The OP is all about TRID and Reg Z and whether an added co-borrower gets a copy of a revised loan estimate to which his/her name has been added. If that's still what's being discussed, a mention of Regulation C -- HMDA -- is a red herring.

In the event that a co-borrower is added to the loan after the initial Loan Estimate is provided, this would increase our credit report fee as well. While this is a valid change in circumstances, we cannot charge the borrower increase the credit report fee since it is a zero tolerance item and the bank would have to eat the fee increase, correct?

Thank you.

You could re-issue the LE within 3 business days of the co-borrower being added (i'm assuming it was at the request of the applicants) to add a 2nd credit report fee....is that the question?

No - you can change 0% tolerance fees with a valid changed circumstance.

Yes, I was wondering if a second credit report fee could be added as a result of the co-borrower addition to the application. Thank you both for setting me straight and informing me that we can add this fee to the loan costs.

Off subject a bit

If a customer requests a new loan estimate because the loan amount has gone down can revise the LE as a curtesy without doing a change in circumstance? There is not a tolerance issue and nothing else has changed on the loan estimate.

Thank you!

A borrower request is considered a valid changed circumstance. Besides, the loan amount went down so that's most likely a CC too.

You can issue an informational LE to a borrower at anytime. A changed circumstance only involves an increase in fees.