Change of Circumstance Form? Needed When Marrying, Divorcing, Breathing, Moving and Dying?

November 14th, 2012

What in the whole wide universe is a Change of Circumstance form? It sounds like the most bureaucratic, idiotic, useless, pointless, and needless document ever. Wise reader, it is. As part of recent RESPA law changes, we now have to issue a mortgage borrower a Change of Circumstance form any time we move a muscle, any time we cross the room, any time we use the restroom, we must alert the mortgage consumer as to all comings and goings and changes in circumstance! It is critical! It is a must! It is the law! I am of course being sarcastic, but for the love of all things logical, pure, and good, can I please get some applause for the use and reintroduction of logic into the mortgage business?

Here are some examples of when we have to send the mortgage client these Change of Circumstance forms, that can be anywhere from 6-10 pages each time there is a change.

-The loan amount changes.
-The lock-in expiration date changes.
-There is a name change.
-There is a loan program change.
-There is an interest rate change.

I could go on, but you get the point.

I had a client recently who was refinancing, and it took more time than we expected so we extended her lock-in for her. After that she decided to change the loan term, which changed the interest rate. Then right before settlement she decided to add her husband to the Deed who she previously decided not to add on the Deed because they were newly married.

This resulted in almost 25 pages of these frequently cursed Change of Circumstance forms, due to three separate sets of changes! The clients don’t care to sign them, they’ll see it at settlement, and its just more paperwork to field, fax, scan, and email beforehand!

The form is now used to make sure the consumer does not have a last minute change hidden from them, and then they show up at the settlement of their loan to an expensive surprise. I understand protecting the consumer, but they were already protected. If there was an alteration to the loan terms at settlement that they were unaware of the consumer can:

Not sign the documents.
File lawsuit.
Scream and yell.
Call the local news station to air their complaint.
Get online and complain to one of dozens of websites that allow people to air their opinions.
And more…

The bottom line is that most of the bad actors in the mortgage industry that were perpetrating last minute changes and trying to pass off extra fees, for example, are now out of the business. The new licensing and continuing education requirements and overall regulatory environment is way to eliminate for those sorts of scammers.

In the old days if a client had a legitimate change to request, the client would have called me, requested their changes, I would have altered the file on my end in the system, and when they went to settlement they would see the changes as requested. Good enough, right? If it was not the way the client wanted it at settlement, they could refuse to sign it! So why in the blazes do we need to have a client sign 25 pages of extra tree killing documents?

Call your local representative or your Senators and tell them to stop the insanity, and reform Fannie Mae and Freddie Mac now! Privatize it, kill it, change it, something, anything, please!

Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.

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