Change of Circumstance (COC) refers to any significant change that affects the loan terms or costs, requiring updated disclosures to the borrower. Fee level changes associated with a COC must be carefully managed to remain within regulatory tolerances and ensure transparency for the borrower. This blog explores the different fee level changes for COC in Encompass 360.
This is the second part of our blog exploring fee level changes for COC in Encompass 360. To read the first part, follow the URL below:
Fee Level Change of Circumstance Details in the Disclosure Tracking Tool
If a loan is being disclosed at a fee level, a Change of Circumstance reason for each fee variance should be documented. Only one reason can be selected for each fee variance. If no reason is selected (reason is blank), it will be considered an invalid reason when calculating the baseline on the Fee Variance Worksheet. Disclosure Tracking tool can be used to provide changed fee details.
Disclosure Details – Reasons Tab
Users can double-click an entry listed in the Disclosure History table to view information about the disclosure in the Disclosure Details window. On the Reasons tab in this window, the following updates have been made:
- New Fee Level Disclosures checkbox: If you select this checkbox on the LE Page 1 or CD Page 1, then the Fee Changes table is displayed at the bottom of the Reasons tab, and it is based on the values entered on the LE Page 1 and CD Page 1
- Reasons for disclosure are now indicated (i.e., the applicable reason’s checkbox is selected) based on the reason indicated on the LE Page 1 or CD Page 1.
- All individual fee level Changed Circumstances are populated to the Changed Circumstance field (one Changed Circumstance per line)
- All individual fee level Comments are populated to the Comments field
- The date the fee changed and the date when the changes were received can be entered here. The revised LE or CD due date field is automatically populated.
- In the new Fee Changes table, the following details for each fee change are provided. (This is a read only table, and cannot be edited.):
- Fee Description
- New Amount ($)
- Description of change
- Comments (i.e., the fee level comments listed in the Comments field)
- Reason
- Changes Received Date
Note that if the loan is being disclosed at a disclosure level and not a fee level, the Fee Changes table will not display and the remaining sections of the tab will indicate the reason for the disclosure.
Disclosed LE or CD Snapshot
When viewing the document details for a disclosed LE or CD, you can click the LE Snapshot button or the CD Snapshot button to view a snapshot of the disclosure that includes tabs that show the content from each page of the LE or CD form. A new Fee Changes tab is provided in the LE and CD snapshots that displays a Fee Changes table that lists the following information:
- Fee Description
- New Amount ($)
- Description (of the change)
- Comments (i.e., the fee level comments listed in the Comments field on the Disclosure Details window’s Reasons tab)
- Reason (for the Change of Circumstance)
- Changes Received Date
Changed Circumstances Option in Disclosure Tracking Settings
Select the Require fee level Changed Circumstances prior to disclosure checkbox in this section to require Fee Level disclosures to indicate a changed circumstance reason for each revised fee prior to sending a revised disclosure. When this checkbox is selected, the new Fee Level Disclosures checkbox (field ID 4461 on the LE Page 1 and CD Page 1 input forms) will be selected and then cannot be changed by users.
If this checkbox is not selected, authorized users will be permitted to select or clear the Fee Level Disclosures checkbox on the LE Page 1 and CD Page 1 as needed. Note that once the loan’s initial disclosure has been sent, you cannot change the Fee Level Disclosures checkbox. Once you have disclosed at a fee level, you must continue to redisclose at a fee level for the remainder of the loan’s lifecycle (and vice versa if you have initially disclosed at a disclosure level).
This setting will apply going forward for new loans and for loans that do not have a disclosure yet.
Fee Variance Worksheet for Fee Level Change of Circumstance
The Fee Variance Worksheet has a new logic that determines fee by fee whether a fee variance will impact the LE and CD baseline calculations based on if the changed circumstance occurred for a valid reason or invalid reason. If the reason is valid, the fee amount will be included in the applicable baseline calculation. If the reason is invalid, the fee amount will not be included.
The LE and CD baseline fields are provided in each section of the Fee Variance Worksheet and calculated accordingly for each section:
- Variance between LE and Itemization
- Difference between LE and CD (Disclosed)
- Variance between CD and Itemization
Each fee variance will be captured with a reason code. There can be only one reason code per fee. If multiple fees make up one line item on the 2015 Itemization, each fee within the line item will be evaluated individually. The reasons that are considered valid or invalid have not changed from earlier versions of Encompass.
Note if a reason for the change of circumstance is not provided, it is considered an invalid reason. This new fee by fee logic is applied only when the new Fee Level Disclosures checkbox (field ID 4461) above the changed circumstance reasons on the Loan Estimate (LE) Page 1 and Closing Disclosure (CD) Page 1 input forms is selected.
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