inspection is not required by the bank. Because a service that is not required by the creditor is generally not subject to a specific tolerance limitation, a revised Loan Estimate is not necessary merely to reset the tolerance for this charge. 4. Additional appraisal charge. The appraisal indicates that repairs must be completed, and the appraiser will need to return to verify them. The return visit results in an additional appraisal charge. Assuming the appraisal charge is subject to the 0% tolerance category, the creditor would need to timely disclose and rely on a revised estimate if it wishes to reset the applicable estimate for tolerance purposes. For new-construction loans, Regulation Z also provides a specific circumstance under which revised estimates may be used when settlement is reasonably expected to occur more than 60 days after the Loan Estimate is provided. To rely on this provision, the original Loan Estimate must contain the required clear and conspicuous statement that the creditor may issue revised disclosures at any time prior to 60 days before consummation. It all comes down to what closing costs are changing and why. A creditor is not required to issue a revised Loan Estimate merely because a fee changes if the change does not affect the creditor’s ability to comply with the applicable good-faith and tolerance requirements. Some banks prefer to provide revised Loan Estimates more frequently to keep borrowers informed, but doing so can complicate tolerance auditing. A revised Loan Estimate also cannot be provided on or after the date the Closing Disclosure is provided, so changes occurring later in the transaction may need to be reflected on a Closing Disclosure or an appropriately corrected Closing Disclosure. When a creditor needs to rely on a revised estimate for tolerance purposes, timing is critical. The creditor generally must provide the revised disclosure within three business days after receiving information sufficient to establish that a permissible reason for revision has occurred. In addition, when a revised Loan Estimate is used, the consumer generally must receive it no later than four business days before consummation. If the creditor fails to provide the revised disclosure within the required period, it generally cannot rely on that revised amount when determining whether the original estimate was made in good faith. The charge may therefore have to be tested against the previously applicable estimate, potentially resulting in a tolerance violation and a required cure. The key is to remember that a changed circumstance or other permissible event does not provide a blanket opportunity to reset closing costs. The bank should be able to identify the event, establish when it learned of it, demonstrate how it affected the particular charge being revised, and show that the revised disclosure was provided within the required timeframe. Good documentation and a clear connection between the event and the revised charge are essential to demonstrating TRID compliance. Renea Rush, CRCM, CCBIA, is a virtual compliance officer. She studied criminal justice with a minor in accounting and has 25 years of experience in banking, including roles in loan support, commercial lending and compliance. Renea values communication and training in building strong compliance cultures and is a featured author for Compliance Alliance. 22 WEST VIRGINIA BANKER
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