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TIL & HUD1 Tolerances

Answered by: 
Lucy Griffin

Question: 
After a recent audit of our secondary mortgage loans, it was determined that the itemized charges on the final TIL and the HUD1 are always the same even though they are prepared the same date. The Mortgage Department's response is that Oh well! As long as we are within tolerance, who cares. They disagree that they should take precautions to match the final TIL with the HUD1. This position is taken because they have no written evidence in the regulations that the HUD1 has to be in agreement with the final TIL. My stance is that even though there are tolerance, these should be for 'human errors' rather than daytoday practice. Is there some regulatory opinion in this regard?
Answer: 

The procedure you suggest is one used by examiners. It is how they find problems. When there is a discrepancy, it usually means that either the TIL or the HUD1 is wrong. TIL has tolerances. The HUD1 does not. It must be accurate to the penny. Comparing the two documents is the best way to crosscheck for accuracy.

Now when it comes to relying on the tolerances this is risky. The tolerances exist to protect the lender in the event of legal mistakes and/or clerical errors. They are not meant to cover sloppiness. The risk in using the tolerances that way is that when a mistake actually happens, the tolerance that was meant to protect you may already be used up!

First published on BankersOnline.com 5/06/02

First published on 05/06/2002

Filed under: 
Compliance
Filed under compliance as: 
Audit
IT
Loans

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