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Under the TRID rules, a lender may increase a fee once disclosed as being non-shoppable by the consumer when the result of an event or circumstance taking place after a disclosure is issued. These are known under the law as “allowable changes in circumstances.”
In such justifiable situations, a fee which is directly related to the change may be increased. To do so, the lender must issue a revised disclosure reflecting the new increased fee within 3 business days (usually not including Saturdays) of learning of the change. This is very important.
Most notable of these changes is when a rate gets locked after application. Under the rules, the lender must issue a revised Loan Estimate reflecting the rate locked and its expiration, along with any fee, or fee increase, which is directly related to the rate lock. This is usually documented via the use of a rate lock agreement so the lender can validate when the change took place and why a fee was increased.
But, what about other circumstances which may result is fee increases? For example, a request from a consumer to increase their loan amount or maybe a determination by an appraiser that repairs are required would constitute a change. Yes, fees may increase as a result. But, are you documenting what took place AND when you learned of it?
The keys to having an increased fee allowable are that you must have clear documentation to evidence;
- What circumstance occurred
- When you became aware of the circumstance
- When the revised disclosure was issued to the consumer to identify the increased fee.
BTW, under the law, you need not send any type cover letter to the consumer about the change. However, I strongly recommend you do so. It’s just good business and customer service.
Without documentation, you may find yourself in trouble in the event of a CFPB, or other regulatory, audit. Worse, you may be forced to rebate the increased fees you had collected.
Don’t let this happen. Keep good, detailed records of all changes resulting in fee increases. Remember the devil is always in the details. Don’t get burned by shoddy record keeping.
