First Guaranty Mortgage Corporation - Compliance Department




What if a consumer pays more for a particular charge for a third-party service service or recording fee than estimated, but the total charges paid are still within 10% of the estimate?
 

Whether an individual estimated charge subject to § 1026.19(e)(3)(ii) is in good faith depends on whether the sum of all charges subject to that section increases by more than 10 percent, even if a particular charge does not increase by 10 percent. A creditor may charge more than 10% in excess of an individual estimated charge in this category, so long as the sum of all charges is still within the 10% cumulative tolerance. (Comment 19(e)(3)(ii)-2)

Source: Consumer Financial Protection Bureau, TILA-RESPA Integrated Disclosure Rule, Small entity compliance guide, March 2015, section 7.8

 
What if the creditor does not provide an estimate of a particular charge that is later charged?
 

Creditors also are provided flexibility in disclosing individual fees by the focus on the aggregate amount of all charges. A creditor may charge a consumer for a fee that would fall under the 10% cumulative tolerance but was not included on the Loan Estimate so long as the sum of all charges in this category paid does not exceed the sum of all estimated charges by more than 10%. (Comment 19(e)(3)(ii)-2)

Source: Consumer Financial Protection Bureau, TILA-RESPA Integrated Disclosure Rule, Small entity compliance guide, March 2015, section 7.9

 
What charges are subject to zero tolerance?
 

For all other charges, creditors are not permitted to charge consumers more than the amount disclosed on the Loan Estimate under any circumstances other than changed circumstances that permit a revised Loan Estimate, as discussed below in section 8.1.
These zero tolerance charges are:

  • Fees paid to the creditor, mortgage broker, or an affiliate of either (§ 1026.19(e)(3)(ii)(B));
  • Fees paid to an unaffiliated third party if the creditor did not permit the consumer to shop for a third party service provider for a settlement service (§ 1026.19(e)(3)(ii)(C)); or
  • Transfer taxes. (Comments 19(e)(3)(i)-1 and -4)

Source: Consumer Financial Protection Bureau, TILA-RESPA Integrated Disclosure Rule, Small entity compliance guide, March 2015, section 7.10

 
What must creditors do when the amounts paid exceed the amounts disclosed on the Loan Estimate beyond the applicable tolerance thresholds?
 

If the amounts paid by the consumer at closing exceed the amounts disclosed on the Loan Estimate beyond the applicable tolerance threshold, the creditor must refund the excess to the consumer no later than 60 calendar days after consummation.

  • For charges subject to zero tolerance, any amount charged beyond the amount disclosed on the Loan Estimate must be refunded to the consumer. (§ 1026.19(e)(3)(i))
  • For charges subject to a 10% cumulative tolerance, to the extent the total sum of the charges added together exceeds the sum of all such charges disclosed on the Loan Estimate by more than 10%, the difference must be refunded to the consumer. (§ 1026.19(e)(3)(ii))

Source: Consumer Financial Protection Bureau, TILA-RESPA Integrated Disclosure Rule, Small entity compliance guide, March 2015, section 7.12

 
When is a consumer permitted to shop for a service?
 

In addition to the Loan Estimate, if the consumer is permitted to shop for a settlement service, the creditor must provide the consumer with a written list of services for which the consumer can shop. This written list of providers is separate from the Loan Estimate, but must be provided within the same time frame—that is, it must be provided to the consumer no later than three business days after the creditor receives the consumer’s application—and the list must:

  • Identify at least one available settlement service provider for each service; and
  • State that the consumer may choose a different provider of that service. (§ 1026.19(e)(3)(ii)(C) and (e)(1)(vi)(C))

The settlement service providers identified on the written list must correspond to the settlement services for which the consumer can shop as disclosed on the Loan Estimate. See form H-27(A) of appendix H to Regulation Z for a model list. (Comment 19(e)(1)(vi)-3)
The creditor may also identify on the written list of providers those services for which the consumer is not permitted to shop, as long as those services are clearly and conspicuously distinguished from those services for which the consumer is permitted to shop. (Comment 19(e)(1)(vi)-6). See form H-27(C) of appendix H to Regulation Z for a sample of the inclusion of this information.

Source: Consumer Financial Protection Bureau, TILA-RESPA Integrated Disclosure Rule, Small entity compliance guide, March 2015, section 7.4

 
 
TRID Resource Center
First Guaranty Mortgage Corporation®
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