10/13/2016

TRID Tolerance Rules Test and Answers

TRID TEST
What fees can change 
Tolerances

TRID, or the TILA-RESPA Integrated Disclosure rule, aims to simplify and standardize mortgage disclosures for consumers. It also includes tolerance rules, which allow for some flexibility in the disclosed amounts compared to the final charges. Here are some examples of TRID tolerance rules:

10% Tolerance: This applies to most origination charges (Section A), services you did not shop for (Section B), and prepaids (Section F). It means the final charges can be up to 10% higher or lower than what was disclosed on the Loan Estimate. For example, if the Loan Estimate showed a $500 origination fee, the actual fee could be between $450 and $550.

Zero Tolerance: This applies to certain fees, such as government recording fees, taxes, and title insurance. These must be disclosed accurately on the Loan Estimate and Closing Disclosure.

Unlimited Tolerance: This applies to services you did shop for (Section C). This means there is no limit on how much the final charges can differ from the Loan Estimate, as long as you received a good faith estimate from multiple providers.

APR Tolerance: The disclosed APR on the Loan Estimate is considered accurate if it falls within a certain tolerance of the actual APR. This tolerance depends on the loan amount and whether the finance charge is overstated or understated.

Aggregate Tolerance: This applies to all fees in Section A, B, and F. Even if individual fees fall within their respective tolerances, the total of these fees cannot be more than 10% higher than the total disclosed on the Loan Estimate.

Timing Tolerance: The Closing Disclosure must be provided to the borrower at least three business days before closing. However, a corrected Closing Disclosure can be provided later if the changes are within certain tolerances, such as minor fee adjustments or interest rate changes due to market fluctuations.

These are just some examples, and the specific tolerances may vary depending on the type of fee and loan. It's always best to consult with a mortgage professional to understand how TRID tolerances apply to your specific situation.

 

What constitutes a loan application?

  • Name
  • Income
  • Social Security Number
  • Property Address
  • Estimated Value of Property
  • Mortgage Loan Amount sought

Any amount in the charges that cannot change (zero variation) charged beyond the amount disclosed on the LE will be charged to the consumer.

Select one:

True

False

 

The appraisal fee is what percent tolerance item?

Select one:

a. 0%

b. 5%

c. 3%

d. 10%What date does TRID become effective for applications?

Select one:

a. October 03, 2016

b. October 03, 2015

c. October 13, 2015

d. October 23, 2015

 

What does the Loan Estimate (LE) replace? (select all that apply):

Select one or more:

a. TIL

b. GFE

c. Cash to Close

d. HUD-1

 

The consumer must receive the Closing Disclosure (CD) no later than 3 business days before consummation of the loan.

Select one:

True

False

 

Which of the following charges can change without any tolerance limit (select all that apply)?

Select one or more:

a. Transfer taxes that are paid by the consumer

b. Homeowners Insurance

c. Prepaid interest

d. Amounts placed in Escrow/Impounds/Reserve

Applications taken prior to October 3, 2015 must continue to use TIL
Disclosure, GFE and HUD-1 settlement statement.

Select one:

True

False

 

The consumer has the right to request a revised Closing Disclosure (CD) one business day before consummation.

Select one:

True

False

Select the correct meaning for the acronym TRID.

Select one:

a. TRID-RESPA Integrated Disclosure

b. TILA-RESPA Integrated Document

c. TILA-RESPA Invoice Disclosure

d. TILA-RESPA Integrated Disclosure

What is the consummation date?

Select one:

a. The recording date

b. The disclosure date

c. The signing date

d. October 3, 2015

The Loan Estimate (LE) and the Closing Disclosure can be issued on the same day.

Select one:

True

False



 




 


 

 

•RED is Zero tolerance

Application Fee

Appraisal Waiver fee

Assumption Fee

Broker compensation

Commitment Fee

Doc Prep fee - for lender (note, mortgage)

Du Underwriting Fee

Escrow waiver fee

Lenders inspection Fee

Loan handling fee

Loan level price adjustments

Mortgage Broker Fee

Origination fee

Overnight, wire, courier

Paid by borrower

Points

Processing fee

Rate Lock Extension

Rate Lock Fee

Tax Transcript fee (4506T fee)

Underwriting Fee

Verification of Employment Fee

Warehouse Fee

Blue no tolerance fee

All other escrow deposits

Escrow deposit – homeowners ins

Escrow deposit – flood insurance

Escrow deposit – MIP/PMI

Escrow deposit – taxes

 

Blue no tolerance limit

Commission - Real Estate

Credit Life & Disability Insurance

Debt cancellation coverage

Debt suspension coverage

Homeowners Association and Condominium fees associated with transfer of ownership (optional)

Inspection fees not required by lender but paid for by borrower under real estate contract

Payments to Seller for purchasing personal property under RE sales contract

Title Insurance - Owner (optional)

Warranties for home appliances and systems (optional)

Appraisal Fee

Appraisal Management Company Fee

Attorney Fees –lender

Credit Report Fee

Flood Determination

Flood Monitoring Fee

Homeowners Association Certification fee

MERS Registration fee

Notary fees

RD guaranty fee

Subordination fee

Survey (required and selected by Lender)

Tax Monitoring Fee

Tax Status Research Fee

Termite inspection (lender selects)

Title - closing protection letter fee Upfront FHA MIP

Title Review fee

Transaction fee

USDA guarantee fee

VA Funding Fee

GREEN 10% Tolerance

Inspection Fee

Settlement or Closing Fee

Survey (Required by lender, borrower selects)

Termite inspection fee (borrower shops)

Title - underwriter portion of fee

Title Agents Portion of Title Insurance

Title Insurance – Lender

Title Search

Title services & Lenders title policy

Assignment Recording Fee

County deed stamps

Other recording fees

Revenue Stamps paid by Seller

Subordination Recording Fee

Earthquake Insurance (if required)

Earthquake Insurance (optional)

Flood Insurance

Homeowners Insurance

Interest – prepaid

LPMI (Lender Paid Mortgage Insurance)

Mortgage Insurance Premium (Paid at closing)

Real Estate Taxes

 

Tax Transfer Fee

 

One final type of fee subject to zero tolerance is transfer taxes. In general, transfer taxes are State and local government fees on mortgages that are based on the loan amount or sales price. Note that the name used under State or local law to refer to these amounts is not indicative of whether they are disclosed as transfer taxes or as recording fees and other taxes. With respect to transfer taxes, the Consumer Financial Protection Bureau has commented that those schedules are readily accessible and amounts don’t often fluctuate. Therefore, it is believed that creditors should be able to disclose transfer taxes accurately and not need any tolerance cushion.

 copyright Caroline Gerardo