Investor states that the Lender Issued GFE disclosed the fee incorrectly and thus, the lender (NOT BROKER) must cure the violation even on a borrower paid transaction. Broker issued an initial GFE. As a lender, we issued our GFE to match exactly what the broker disclosed exactly. Any redisclosed GFEs were at the request of the broker and list fees exactly as requested by broker.

You made the loan, not the broker, and the investor bought the loan from you, not your broker. It will be your responsibility to make your borrower whole if you expect the investor to fund the loan.

You as the lender have the responsibility to ensure your broker is creating correct disclosures on your behalf. If not, you either live with the consequences, or find a new broker.

HUD's RESPA FAQ permits the broker or the lender to cure the tolerance. Given your reasoning, broker is never responsible. Do you have any statutory guidance or interpretation I can point to?

I don't think #Just Jay is saying the broker is never responsible so much as he is saying that the lender is ultimately responsible for the loan and all parts of it. Whether they can recoup the cure from the broker would depend on the contract relationship, not the Reg. which speaks a number of times to 'the lender (being) ultimately responsible'.

Understood but RESPA FAQ states the broker or the lender can cure the tolerance. If it is dependent on the contractual relationship, should I look to the broker agreement?

Let's back up the train.
The investor YOU dealt with is saying a cure must be done.
They are looking to YOU to get it done because their contract is with YOU, not the broker you have a contract with.
If you can recoup it from the broker, fine.
If not, in order to get the loan purchased, you're going to have to pay the cure.

The part of your original post that I see as a problem is:
imho, you shouldn't be laying the blame on the broker. Who's in charge, the broker or the lender? RESPA says it's the lender. Therefore, you need to be sure that what you're doing is correct by the Reg, not by what the broker requests.

I agree with TR. You should pay the cure and then you collect from broker. If broker does not reimburse the cure, find another broker.

Let me get this straight.

If it is borrower paid comp on a WS transaction, we would pay the cure and we can deduct from broker's compensation?

I was out of the office most of the day... Truff states the thoughts behind my opinion correctly. As the bank making the loan, you are responsible for its accuracy. Whether you can go after your broker to make you whole, is a different, contractual matter, between you and your broker, outside of making the customer whole at the pleasure of your investor.

Nobody is saying you can deduct from the broker's compensation. You would have to review your contract with the broker to determine what liabilities and remedies are afforded to you by said contract.

Again I suggest that you recognize that this error is as much your bank's fault as it is the broker's because as you went along with the broker's numbers on the original GFE. Not to mention, you actually prepared the redisclosures without altering anything that might have been incorrectly presented by the broker.