Many mortgage professionals are asking this question, and for good reason. According to the Credit Union National Association, “the TRID rule is not clear whether a revised closing disclosure can be used to adjust for charges. Ultimately, this can unnecessarily delay a closing,” hence the “black hole” moniker.
A closing delay may not be the end of a mortgage lender’s world, but it can certainly put a dent in customer satisfaction, not to mention make everything more difficult for other mortgage professionals who are also trying to make the Closing Disclosure come together in a compliant and efficient manner.
ATS Secured hosted a webinar where Richard Horn, who led the final rule, addressed this very issue:
What Is the “Black Hole” Timeline For Resetting Tolerances On the CD?
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Richard Horn’s Answer:
Comment 19(e)(4)(ii)-1 is not as clearly worded as some would like. There are a lot of different interpretations out there about what the timeframe is for providing revised estimates on the closing disclosure.
Generally, my interpretation is that if you have a changed circumstance that you get information about six business days or less before consummation, then you can disclose the revised estimate that results from that changed circumstance on the Closing Disclosure and use it to rebaseline your tolerance calculation.
Using the interpretation I just mentioned, if you provide the Loan Estimate early—ten days before closing—and then received information about a changed circumstance eight days before closing, then because that is earlier than the six business days or less I just mentioned, that changed circumstance would fall into the “black hole” and not be able to be used for changed circumstances.
A similar thing would happen if closing were delayed. Let’s say closing is delayed two weeks, then for a period of time until you get back within that window of six business days before closing, changed circumstances would also fall into the “black hole” and not be able to be used for revised estimates.
Interested in learning more from this webinar? Download the full webinar, complete with Q&As, today!