Changed Circumstance or Closing Delay? A Purchase Price Increase

Yes, with conditions. A changed circumstance includes new information specific to the borrower that was not relied on at application and that affects settlement charges. The signed counteroffer is new information about the purchase price, and it changes transfer taxes and title charges. The loan officer must provide a revised Loan Estimate within 3 business days of receiving the counteroffer. The revised Loan Estimate must also be received by the borrower no later than 4 business days before consummation. For a June 18 closing, that means the borrower must receive it by June 12, assuming no holidays. Mailing on June 6 is not the test; receipt is the test. The loan officer should use in-person delivery or electronic delivery with evidence of receipt, and confirm the borrower actually received it by the deadline. If receipt slips, the closing must be delayed unless another rule permits the delay to be avoided.

That proposal is not compliant. Transfer taxes are a zero-tolerance category; the Closing Disclosure must show the actual transfer tax charged by the government. A title company cannot lawfully “absorb” a transfer tax by understating it on the Closing Disclosure. Lender’s title insurance may be zero tolerance or a 10% cumulative tolerance depending on whether the borrower could shop and which provider was used, but the actual premium still must be disclosed accurately. If the increase is due to a valid changed circumstance and the revised Loan Estimate is delivered on time, the revised estimates generally reset the baseline for the affected charges. If it is not delivered on time, the loan officer should not paper over the difference. The correct options are to cure any tolerance violation, delay closing until the revised disclosure and waiting period are satisfied, or restructure the transaction. Deliberately showing inaccurate figures on the Closing Disclosure can create RESPA and fraud exposure.

The loan officer must confirm receipt by June 12, because the rule requires the borrower to receive the revised Loan Estimate no later than 4 business days before consummation. A mailing date alone does not prove receipt. The loan officer should obtain a delivery confirmation, an electronic receipt, or a signed acknowledgment. If receipt by June 12 cannot be confirmed, the closing should be postponed until the waiting period is satisfied. The loan officer should not rely on the title company’s oral assurance that the numbers will “wash out.” A short delay is far less costly than a RESPA violation, a tolerance cure, or an inaccurate Closing Disclosure. The file should document the changed circumstance, the date the broker learned of it, when the revised Loan Estimate was delivered, and how receipt was verified.