Borrowers are often confused about when they need to receive a revised loan estimate. This is understandable, as revised loan estimate requirements can be unclear. This article will help clarify any confusion and explain when borrowers should receive a revised loan estimate. It also covers what happens if the borrower doesn’t receive a revised loan estimate when they’re supposed to.
What is a revised loan estimate?
A revised loan estimate is a document that provides borrowers with updated information about the terms of their mortgage loan or mortgage loan amount. This document is sent to borrowers when there are changes in the terms of their original mortgage offer.
Mortgage professionals must provide a revised loan estimate whenever there is a “material change” in the terms of the proposed loan. This could be as simple as changing the interest rate or extending the term of the loan.
Borrowers are required to receive a revised loan estimate whenever there is a changed circumstance, including changes to any of the following:
- interest rate
- principal amount
- loan fees
- escrow account
- term of the mortgage loan
This document must also be sent to borrowers whenever there is a change to any of the following:
- Loan-to-Value Ratio (LTV)
- Debt-to-Income Ratio (DTI)
- Credit score
- Property address
The revised loan estimate must be provided three business days before the revised closing date.
What are the consequences of not providing a revised loan estimate when required?
If a revised loan estimate is not provided when required, the lender may be subject to civil penalties. In addition, the lender could lose their right to do business in that state. Finally, borrowers have the right to cancel their mortgage transaction if they do not receive a revised loan estimate when required.
How should mortgage companies provide a new loan estimate to borrowers?
Revised loan estimate requirements can be met with little effort by mortgage companies using loan origination software. The revised document will also be stored in their secure account for future reference.
Regardless of how they choose to send revised loan estimates to their borrowers, mortgage professionals should keep a copy of the revised document in their files.
When mortgage terms change, revised loan estimates must be provided to borrowers three business days before the revised closing date. It is essential to use loan origination software to meet revised loan estimate requirements quickly. Lenders may incur penalties if revised loan estimates are not sent when required.
What happens if there is a discrepancy between the original loan estimate and the revised loan estimate?
If there is a discrepancy between the revised and the original loan estimate, borrowers must be provided with an itemized list of all charges. This document must show how revised loan estimates differ from their previous mortgage offer. The revised closing costs must also be disclosed in writing. The revised disclosures explain why they differ from the original disclosures. Finally, the revised closing costs must be signed and dated by both the borrower and the lender.
This process is known as a loan estimate comparison. It is an essential step in protecting borrowers from being overcharged for their mortgage transactions.
How often can mortgage companies revise a loan estimate, and for what reasons?
A revised loan estimate can be provided to borrowers as often as the lender chooses. However, revised loan estimates cannot be used to increase the amount of money that the borrower is expected to pay at closing. The only reasons for providing a revised loan estimate are changes in mortgage terms or costs associated with the settlement.
Loan officer technology.
The best way to keep on top of loan officer administrative challenges is to use the appropriate technology. Support automation platforms like Capacity can help lenders automate and stay on top of sending the proper documents to borrowers. Support automation platforms allow lenders to quickly meet revised loan estimate requirements and easily access necessary information.
How Capacity can help lenders and borrowers
Capacity helps mortgage professionals close loans more loans, faster.
With Capacity, lenders can quickly meet revised loan estimate requirements because all necessary forms can be housed inside the platform. Capacity also allows for real-time communication with borrowers, ensuring they always have access to the most up-to-date information.
Capacity’s automated workflow capabilities help keep mortgage professionals organized and compliant, so they can focus on providing the best possible service to their clients. Loan officers can use the platform to collect all of the required documents from borrowers and keep track of every step in each application process so that they do not miss any important details or deadlines.
In addition, Capacity’s chatbot functionality puts all of the information that borrowers and employees need right at their fingertips. This allows for real-time communication with borrowers, ensuring they always have access to the most up-to-date information.
We’re just scratching the surface at what Capacity can do for your business.