Hello, I have been reviewing TIL-RESPA disclosures for some time, but after reviewing the information on the CFPB website, I am concerned I have not been correctly calculating tolerance violations/cures. The below scenario only considers 10% can shop fees.

The Loan Estimate disclosed a $2,000 Lender's Title Insurance fee, a $26 Tax Certificate Fee and a $69 Recording Fee = $2,095, and a basis of $2,304.50

The Initial Closing Disclosures disclosed a $1,035 Lender's Title Insurance Fee, a $27 Tax Certificate Fee, a $150 Additional Parcel Fee, a $25 Closing Protection Letter Fee and a $133 Recording Fee.

The Final Disclosure disclosed a $1,035 Lender's Title Insurance Fee, a $27 Tax Certificate Fee, a $150 Additional Parcel Fee, a $25 Closing Protection Letter Fee and a $133 Recording Fee, plus a previously undisclosed Settlement Fee of $140.

If there is a tolerance violation, what is the lender credit amount and how was it calculated?

Welcome to BOL.

If I'm reading correctly then based on the information provided there would be no cure. Could you expand on your thought process where you felt there might be a cure?

I have been told, recently, if any 10% fee increases on the final disclosure, then we have to reconsider the tolerance basis based on the lowest amount disclosed for each fee. However, that is not how I have been calculating tolerances and I couldn't find any support for that on any of my resources. This is why I posted to BOL, hoping for some clarity.

For this example, because there is now a settlement fee that was never disclosed to the borrowers, we would now need to calculate the tolerance basis on the lower lender's title insurance figure and consider $0 for all the fees that were not disclosed on the LE. Like I said, this logic seemed contrary to what all my resources detailed.

Thank you.

Lowest amount disclosed make no sense. You start with the amounts disclosed on your original LE to establish your baselines for tolerance cures. If your fees subject to the 10% aggregate test go up more than 10% and you issued a timely changed circumstance disclosure, then your baseline for any tolerance cures would be adjusted accordingly.

I understand a valid change in circumstance would reset the tolerance basis. The issue I am seeing is there is no documented change in circumstance. The fee changes between the Loan Estimate and Initial Closing Disclosure are due to banker/title company miscommunication.

The 10% category is an aggregate total. Even if the $140 closing fee was not initially disclosed the final total (aggregate) charges did not exceed the 10% tolerance from the fees disclosed on the LE.

Unless I'm missing something there is no cure required for the situation presented.

If I may piggy back off of this thread I have a question. We have a loan request where the lender disclosed a fee as an attorney doc prep fee of $325.00. At closing it was discovered the fee was actually an attorney closing/settlement fee. So both fees were in the 10% bucket and no aggregate increase in fees. The only thing that did change was what it was called. Would that require a tolerance violation for the amount above the 10% threshold for the new fee even though the total bucket amount didn't increase?

1026.38(h)(4) The services and costs disclosed pursuant to paragraphs (f) and (g) of this section on the Closing Disclosure shall be labeled using terminology that describes the item disclosed, in a manner that is consistent with the descriptions or prescribed labels, as applicable, used for such items on the Loan Estimate pursuant to § 1026.37.

If you disclose the wrong service on the LE, you do not get to just use that fee for another service on the CD.

In addition if a fee disclosed on the LE is not charged on the CD that fee cannot be included in the tolerance cure calculation.

Thanks guys. That was my thought as well but the Loan Officer was hoping I was incorrect.

So would we include the Settlement Fee on the initial CD or just on the revised CD with the tolerance cure?

If you know there is to be a tolerance cure when you issue the first (and perhaps only) closing disclosure, you either show the Settlement Fee as paid by others (the lender) and avoid doing the tolerance limit violation routine or you show it as paid by the borrower and complete the Calculating Cash to Close table with the appropriate confessional phrases in the "Did this change?" column and provide a general lender credit.