Class Blog (1 of 3)
ABA Disclosure Requirement
A real estate broker refers a potential customer to a mortgage business in which his wife is employed. She is a vice president but holds no ownership interest in the company.
Does this dictate the use of an ABA disclosure because of
the referral?
Class Blog (2 of 3)
Loan Estimate Requirements
A MLO employed by a broker completes a LE. The MLO has
negotiated with the borrower that $3,000 origination fee will be charged on this loan. The interest rate quoted was 4% good until 2 pm the following day.
The rate sheet used to quote the loan reflected a premium of
$3,000; all of which would be credited to the borrower. The borrower has chose to lock this rate however, the MLO forgot to lock the loan until the next day.
Later that afternoon, the bond market takes a tumble, and
the lender issues updated rates. Now, 4% only pays $1,000 dollars in lender paid credits, not
the originally negotiated $3,000.
- How does the MLO honor the loan estimate that has been provided?
- Does the MLO have to take less money?
- Is the MLO allowed to raise the rate to return to the mutually agreed upon compensation?
Class Blog (3 of 3)
Origination Charge Changes
A lender shows a $425 charge for the appraisal on a borrowers loan estimate. The vendor was chosen by the mortgage company and the borrower was not given a chance to shop for this service. The actual cost of the appraisal came in at $475 after it was completed.
- Can the lender use an appraiser where they did not allow the borrower the opportunity to shop for this service? As well, can the lender now increase the charge to reflect the actual cost on the Closing Disclosure?
1 of 3
ReplyDeleteI think because she is a spouse of the broker, the answer is yes. Since she isn't directly benefiting financially, no. If the answer is any combination of the required reasons, then yes, the broker needs to let the customer know.
2 of 3
This was a loan estimate, and I think because the fault was on the end of the loan officer, the rate should now match what the current market would cover. If the agreement was verbal, it would be difficult to prove the agreement happened. If the agreement was in writing, and/or signed documentation, stating BOTH the 4% and $3,000 fees then a conversation between the MLO and borrower about the agreed upon rates is necessary. Otherwise, I would say the MLO has to take the current rate based on their own fault for waiting too late to lock in the rate.
3 of 3
Both answers to these questions are NO. The lender has to allow the borrower an opportunity to shop for their own appraiser, as long as they have identified their settlement services with the borrower. The lender cannot raise the rates if the initial projection was already stated in LE. These estimates are considered GFE, and can only change if there is a "changed circumstance" that affects these charges.
**Please let me know if my comments are wrong, and offer an explanation that will correct my understanding.**
1 of 3
ReplyDeleteNo, just being an employee doesn't trigger the need for disclosure. She doesn't own more than 1% of the company.
2 of 3
I think they would have to issue a revised loan estimate to match the current numbers. Yes they would have to take less money. I don't believe they could raise the rate without signed paperwork.
3 of 3
I don't believe the company has to allow the lender to shop for the appraisal but in this case since they did not I believe the $425 charge is subject to zero tolerance and can't be raised.
Class Blog (1 of 3)
ReplyDeleteABA Disclosure Requirement
No, the fact that he is a spouse of an employee, does not trigger the ABA disclosures. If he she owned more than 1% of the company, then it would be.
Class Blog (2 of 3)
Loan Estimate Requirements
A #1:
A LE is supposed to be issued in “good faith”, I do not believe the MLO should attempt to charge the $3,000 since it is not in the benefit of the borrower and was not locked.
A #2:
Yes, the MLO would have to take less money.
A #3:
No
Class Blog (3 of 3)
Origination Charge Changes
A #1:
No, if the lender has not allowed the borrower to shop around, they cannot use an appraiser.
A #2:
No, they have to respect what it was stated in the LE unless there is a Change of circumstance and it doesn’t seem like there was.
1 of 3:
ReplyDeleteSince she doesn't own 1% of the company, and ABA isn't required
2 of 3:
Due to the MLO's error the original LE should be honored and the MLO will have to take less money and wouldn't be allowed to raise the rate
3 of 3:
I believe the appraisal charge the buyer is liable for is the amount originally shown on the LE, or $425.
1 of 3
ReplyDeleteABA Disclosure
No disclosure needed, the wife had no stake in the business.
2 of 3
Loan Estimate Requirements
If the MLO is able to lock in the rate before 2pm then they will be able to honor the loan and accept the agreed upon premium. If they lock in the loan after 2pm the next day they will have to accept less money due to market tumble. The MLO will not be able to adjust the rate to compensate the reduction in premium.
3 of 3
Origination Charge Changes
Yes, the lender is able to choose an appraiser without borrower shopping but may only charge what is on the estimate.
1. No
ReplyDelete2. MLO would take less money
3. Lender can use approved AMC but not charge higher than what was disclosed
1 of 3
ReplyDeleteNo since the spouse has no ownership of the company, but is an employee only
2 of 3
ReplyDeleteI believe that due to the Loan estimate requirements the MLO will need to lock in on the agreed upon rate given it was "operator error"..literally
3 of 3
ReplyDeleteI believe that the lender can only charge what they put in the loan estimate however I am uncertain if the lender can choose the appraiser with allowing the borrower the option to shop around.
1 of 1:
ReplyDeleteNO, she is just an employee and not a % holder of the company.
2 of 3 A:
ReplyDeleteI think the MLO needs to talk to his lender about the issue of not locking in the rate. See if they can come to a agreement with the customer. But the loan estimate might be locked in.
B. Loan officer can only take the $1,000.00
C. NO.
3 of 3:
ReplyDeleteI believe the lender has to give the buyer a choice to the appraiser. The lender can only charge what was quoted on the LE.
1 of 3
ReplyDeleteNo the use of an ABA is not needed since she has no stake in the business
2 of 3
The MLO must honor the agreed offer regardless, the MLO made the mistake and should take less money for his own mistake and not raise the rate or that would simply be unethical
3 of 3
Yes the lender can select the appraiser if they deem necessary but should honor the price on the LE provided prior