Hi - my name is XXXXX XXXXX I'm a Real Estate litigation attorney. Thanks for your question.
Changed circumstances are defined as:
- Acts of God, war, disaster, or other emergency;
- Information particular to the borrower or transaction that was relied on in providing the GFE that changes or is found to be inaccurate after the GFE has been provided;
- New information particular to the borrower or transaction that was not relied on in providing the GFE; or
- Other circumstances that are particular to the borrower or transaction, including boundary disputes, the need for flood insurance, or environmental problems.
This could likely be considered as a changed circumstance because you're using the client's mother - - which you weren't before - - to give you a better rate and no points.
Here's a very good link about the RESPA regulations and new changes: http://www.consumerfinance.gov/guidance/supervision/manual/respa-narrative/
The regulations do require a new GFE if the interest rates change, which shows the revised interest rate dependent charges and terms. All other charges and terms must remain the same as on the original GFE, unless changed circumstances or borrower-requested changes result in increased
costs for settlement services or affect the borrower’s eligibility for the specific loan terms identified inthe original GFE.
I think that best thing to do is have the borrowwer sign an new good faith estimate and RESPA BECAUSE the interest rate and points have changed - - even though it is for the best.
There is so much scrutiny and so many lawsuits that come out of lenders swapping things up too fast that it's not worth the risk. In this case, I could forsee that the borrower would say that he/she never knew that mom was going to claim residency, etc.
Even though it will cost you some time, it's worth it.