Brian Cumpton

NMLS# 376055

Builder Manager

Tolerances, which are defined as “variances” under TRID ("Know Before You Owe") changed in October 2015. More fees now fall into the 0% and 10% categories. Lenders now have greater responsibility for ensuring that fees are accurately quoted on the Loan Estimate.

A. TOLERANCES (VARIANCES) TABLE. The following table lists examples of 0% tolerances, 10% tolerances, and fees that are not held to tolerance.
TOLERANCES (VARIANCES) TABLE
1. 0% TOLERANCES 2. 10% CUMULATIVE TOLERANCES 3. FEES NOT HELD TO TOLERANCE
a. Lender Charges
  • Origination fees
  • Discount points
  • Lender fees
a. Recording Fees a. Prepaid Interest
b. Lender Credits
  • Cannot decrease
b. Third-Party Charges: If shopping is allowed and Borrowers does select Provider on SSPL:
  • Settlement Agent
  • Title company
  • Pest inspector
b. Property Insurance Premiums
  • Hazard
  • Flood
  • Etc.
c. Third-Party Charges: If Borrower may not shop for the Provider:
  • Credit Report
  • Appraisal
  • Final Inspection
  • Mortgage Insurance (UFMIP, VAFF, USDA Guarantee)
c. Amounts Placed in Escrow
  • Property Insurance
  • Property Taxes
  • Monthly MI
d. Third-Party Charges: If Shopping Allowed and Borrower was not provided an SSPL or Provider was not included on the SSPL:
  • Settlement Agent
  • Title company
  • Pest inspector
d. Third-Party Charges: If Shopping Allowed and Borrower does not select Provider on SSPL:
  • Settlement Agent
  • Title company
  • Pest inspector
e. Fees Paid to an Affiliate of Academy e. Third-Party Charges: If service is not required by Academy:
  • Home inspection
  • Home warranty
  • HOA fees
  • Pest inspection (if not required by Academy)
f. Transfer Taxes
B. DEFINITIONS
  1. Baseline: The amount used to determine if the variance percentage has been exceeded resulting in a cure to the borrower.

  2. 0% Tolerance: The borrower may not be charged an amount higher than previously disclosed. If a qualifying changed circumstance applies and a revised Loan Estimate has been provided to the borrower in accordance with the requirements of the regulation, the baseline may be reset.

  3. 10% Cumulative Tolerance: For fees subject to the 10% variation, the rule permits the lender to provide a revised Loan Estimate when the fees increase by less than 10%. However, unless the fees increase the aggregate total by more than 10% due to a changed circumstance, the revised Loan Estimate does not reset the 10% baseline tolerance. The final fees will be compared against those disclosed on the original LE or the last revised LE that exceeded the 10% tolerance.

  4. Third-Party Charges: The rules regarding Third Party charges vary based on the relationship between the Third Party and Academy. For purposes of the above chart, unless otherwise noted, it is assumed that Academy does not have an affiliated relationship with any third party vendors.

  5. SSPL (Settlement Service Provider List): Academy is required to provide an SSPL with the Loan Estimate. If a fee has been included in Section C of the LE, the provider should be listed on the SSPL. If the borrower selects the provider on the list, the fee will fall into the 10% tolerance bucket. If the borrower does not select the provider on the list, the fee will fall into the Fees Not Held to Tolerance bucket. If the borrower is not given an SSPL or if the provider has not been included on the SSPL, the fee must be disclosed in Section B and falls in the 0% tolerance bucket.

  6. Baseline Reset for 10% Cumulative Tolerance: If Academy permits the borrower to shop for a required settlement service and the borrower selects a provider that is NOT on the SSPL, that charge is removed from consideration for purposes of determining the 10% tolerance amount. In addition, if a service is not performed for some reason, that charge must be removed from the 10% tolerance amount.

Please note: The information included in this document is provided for informational purposes only. It is subject to change and is illustrative, not exhaustive, and it should not be applied as or interpreted as legal counsel in any way.

NMLS# 376055

State Lic: FL: LO7002; IL: 031.0030543;

Corp Lic: FL: MLD241; IL: MB.6760661;

Illinois Residential Mortgage Licensee;