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.
- The fee-level change of circumstance (COC) in Encompass 360 workflow starts with the Good Faith Fee Variance Violated alert that is generated when a fee is changed that results in a variance between the Loan Estimate or Closing Disclosure and the 2015 Itemization calculated in the Total Good Faith Amount section of the Fee Variance Worksheet.
- When this alert is triggered, users can view the alert details and use the new Fee Details section to enter all the details about the changed fee, including the changed circumstance date and the revised LE or CD due date.
- The changed circumstance details entered in the alert are then automatically populated to the applicable fields in the LE Page 1 and CD Page 1, along with applicable areas in the Disclosure Tracking tool. These details must be entered in the alert- they cannot be entered directly on the LE Page 1, CD Page 1, or Disclosure Tracking tool.
Fee Level Disclosures checkbox on Loan Estimate Page 1 and Closing Disclosure Page 1
- Fee Level Disclosures checkbox (field ID 4461) is provided above the list of changed circumstance reasons on the Loan Estimate (LE) Page 1 and Closing Disclosure (CD) Page 1 input forms.
- By default, this checkbox is NOT selected which indicates that loans will be disclosed at a disclosure level.
- When this checkbox is selected, fees must be redisclosed at the fee level (i.e., users must send revised disclosures when a fee is changed).
- In addition, when this checkbox is selected, the disclosure reasons and Changed Circumstance information on the LE Page 1 and CD Page 1 are grayed out (i.e., inactive).
- These sections will instead be populated with data entered in the Good Faith Fee Variance Violated alert details.
- It is important to consider that the disclosure level that is set with the Fee Level Disclosures checkbox is established once the initial disclosure (typically the LE) is sent.
- Once this initial disclosure has been sent, a user cannot change the Fee Level Disclosures checkbox. Once a lender has disclosed at a fee level, they must continue to redisclose at a fee level for the remainder of the loan’s lifecycle (and vice versa if they have initially disclosed at a disclosure level).
- The Fee Level Disclosures checkbox will no longer be editable (i.e., it will be grayed out) once the loan is disclosed.
Good Faith Fee Variance Violated Alert to Indicate Change of Circumstance at the Fee Level
- The Good Faith Fee Variance Violated alert is generated when there is a variance between the LE and the 2015 Itemization in the Total Good Faith Amount section (field ID FV.X345) of the Fee Variance Worksheet or when there is a variance between the CD and 2015 Itemization in the Total Good Faith Amount section (field ID FV.X347) on the worksheet.
- These alerts display on the Pipeline and the Alerts & Messages tab in the Log, as well as in a pop-up window when a loan is saved.
- Click the alert icon or indicator to view the alert details, including each applicable fee that was changed, and clear the alert.
- When viewing the alert details, a new Fee Details section is displayed (below the Trigger Fields section) that provides the following information.
- Here a user can enter fee change details about each fee at a granular level:
- Applies To – At the top of this section, select LE or CD from the Applies To dropdown list to indicate the form (LE or CD) where these fee change details will be applied.
- Changes Received Date – Will auto-populate with today’s date and reflects the same date used for this field on the LE Page 1 and CD Page 1
- Revised LE Due Date or Revised CD Due Date – In the Fee Details section, you can indicate if the fee change was made on the LE Page 1 or CD Page 1. Depending on the disclosure (as indicated by the selection in the Applies To field), this field will refer to the LE due date or CD due date accordingly. This is read-only field, calculated by the Encompass system.
- Description – Description of the Changed Circumstance (click the Lookup icon (magnifying glass) to select the changed circumstance from the list).
- Comments – Comments related to the Changed Circumstance
- Reason –Select the reason for the change from the dropdown list. There can only be one reason for each fee. This dropdown list provides the same list of reasons that is provided on the LE Page 1 and CD Page 1. Some reasons apply only to the LE, some apply only to the CD, and some apply to both. If LE is selected for the Applies To field, only reasons that apply only to the LE or LE and CD will be displayed in the list. If CD is selected for the Applies To field, only reasons that apply only to the CD or the LE and CD will be displayed in the list.
- All of the selections made here are automatically populated to the Disclosure Information and Changed Circumstance sections on the LE Page 1 and CD Page 1. These sections on the LE Page 1 and CD Page 1 are grayed out (i.e., inactive).
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