Understanding when estimates may be revised — and what a revision permits — is essential for compliance with the regulations. interest-rate-dependent charges when the interest rate is locked after the initial Loan Estimate; (5) the consumer indicates an intent to proceed after the Loan Estimate has expired; and (6) certain delayed settlements involving new-construction loans. A permissible circumstance must affect the particular estimated charge or charges being revised; the creditor may not use the event to reset unrelated charges. TRID limits how much certain closing costs may increase between the Loan Estimate and the Closing Disclosure. Charges paid to the creditor, mortgage broker or an affiliate, as well as charges for required services for which the consumer cannot shop, are generally subject to a 0% tolerance. Recording fees and charges for required third-party services for which the consumer is permitted to shop and selects a provider from the creditor’s written list are generally subject to a 10% cumulative tolerance. Certain other charges, such as services not required by the creditor and services for which the consumer selects a provider outside the creditor’s written list, may change without a specific tolerance limit. The applicable baseline estimates may be reset only when one of the circumstances permitted by Regulation Z occurs, and the requirements for using revised estimates are satisfied. However, this does not mean that every permissible circumstance gives the lender permission to reset every closing cost. The change in closing costs must be tied to the actual event that caused it and must be documented by the bank. The bank should document the original estimate of the charge, the reason for the revision, how the event affected the charge and that the revised estimate increased only to the extent the permissible reason actually increased the charge. The bank should also document the date it received sufficient information to establish the reason for the revision so that it can demonstrate compliance with the applicable three-business-day timing requirement. Depending on the timing of the change relative to the consummation and delivery of the Closing Disclosure, the revised estimate may need to be reflected on the Closing Disclosure or on an appropriately corrected Closing Disclosure, rather than on a revised Loan Estimate. A revised Loan Estimate may not be provided on or after the date the Closing Disclosure is provided. One other notable item: If a fee is now known, the creditor should use the best information reasonably available when preparing the revised disclosure. For example, if the appraisal has been completed and the actual charge is known, that information should be taken into account when preparing the revised disclosure. Let’s look at some examples. 1. Increase in loan amount. The borrower requests an increase in the loan amount for a refinance transaction. The loan amount determines the lender’s title policy premium. If the lender’s title policy falls within the 10% cumulative tolerance category, the creditor could rely on a revised estimate if the consumer-requested change causes the aggregate charges subject to the 10% tolerance to exceed the permitted limit. The 10% test applies to the cumulative total of charges in that tolerance category, rather than to whether an individual title charge increased by more than 10%. 2. Change in loan eligibility. During underwriting, verified income is lower than originally anticipated, necessitating a change from a secondary-market mortgage loan to an in-house mortgage loan. As a result of the change in eligibility and the loan program, the origination fee has increased. A revised disclosure may be used to reflect the resulting increase in the origination fee, provided the requirements for using revised estimates are satisfied. 3. Consumer-requested inspection. The borrower requests an HVAC inspection for the home being purchased. An additional fee will need to be collected, but the 21 WEST VIRGINIA BANKER
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