Redisclose Improperly Disclosed Loan?

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Question:

I found while auditing a file, that a mortgage loan was disclosed as a 30 year product but the note and loan closed as a 5/1 ARM. I'm trying to determine my next course of action regarding this matter. Do I need to redisclose and book the loan as a 30 year fixed even though the note is a 5/1 ARM?

Answer:

Answer by David Dickinson: Go with what the note states. Disclosures are not legal contracts; the note is. You certainly may have issues with the borrower down the road, but there is nothing you can do about informational errors after the loan is closed. Computational errors can/must be corrected.

I also would not point this out to the customer. As I stated above, you can't correct informational errors, so there is nothing to be gained by bringing this to his/her attention.

Answer:

Answer by Richard Insley: If more than one was done this way, regulators will see it as a pattern and practice, and will apply the TIL enforcement policy.

First published on BankersOnline.com 11/16/09