Hello, we received guidance recently that a broker or agent cannot cure a tolerance violation- that the responsibility rests solely on the creditor. Our LOS compliance engine also doesn't seem to like when we try to issue a third party cure instead of a lender cure. The rule does only use the word "creditor" when talking about curing tolerance violations. However, I wanted to put it out to this forum to see how everyone else handles these situations- it seems crazy that we're still on the hook even if it truly wasn't the fault of the lender. As long as it doesn't interfere with LO comp rules or maximum third-party credits, I would think we should be able to allow a wholesale broker or a real estate agent to issue credit to cure tolerance violations.

These are the two situations we have seen:

1) A wholesale broker under-disclosed their lender's title insurance and we are now looking at a 10% tolerance violation. The broker wants to pay for the difference. (The loan is borrower-paid compensation).

2) We disclosed an appraisal re-inspection on our Loan Estimate. Now, the CD has been issued. The agent told us that the work had been done and we ordered the re-inspection, but it turns out the work was NOT done and the appraiser would have to go out again. We cannot charge a second re-inspection fee to the borrower at this point because the CD has been issued, so the agent agrees to pay for the additional re-inspection charge.

Is there any reason we could not do the two scenarios above? How would we show this? Our thought was to split the charge (charge the borrower the amount disclosed on the LE, show the rest as "paid by other" on the CD), but we are having trouble showing it this way.

It may be that it's just the lender's problem anyway (like many things with TRID!), but we are trying to see if we have any other options. Thanks for your input.

Kelcey we just had this happen again today. The title company said a certain fee would not apply, even after questioning and guess what, it applies. They said they would pay it.

We are not considering this an error requiring a tolerance cure. The borrower didn't have to pay any more, so why would we have to refund them anything. So, we've documented the file and left it alone.

We debated and debated. Part of the reason for our conclusion is what you said above, the guidance said an agent can't cure the violation. Very true, but if the borrower never had to pay more, where's the violation to cure?

I guess we'll see how it shakes out. I'd love to hear what others are doing.

My question is how on earth or you getting title companies to agree to pay the difference. Our fees always changing from the quote from title at consummation (however minute they may be). I've come to understand that's the norm in California but the title companies will not pay the difference.

What state are you located in Kelsey?

Document all conversations including date, time, who you spoke to at the title company. Save all emails. It's all about CYA and threatening to only use title companies who get it right, and/or, who do the right thing when they screw up. Don't accept anything less.

We're in a very particular niche here-- a California lender where the bulk of our business is wholesale. Yes, fees do change very often from the beginning of the loan to consummation- we've seen it getting better with the bigger companies who are getting on board with TRID, but it can still be all over the place. Also, we are in the position of having to trust our brokers to a certain degree to disclose correctly up-front (or as close as they can get it). I think at a minimum we need to start requiring better documentation of how they got their fees.

Our title companies will very rarely pay the difference if someone has under-disclosed- and I understand that they feel it's not their problem. As a lender of course we do take the ultimate responsibility and will cure what is needed, but we're looking for any other options to hold brokers or agents accountable and allow them to cure if it was their error. The rule doesn't appear to address other parties curing tolerance violations at all, but I was wondering if anyone else was doing this and how they would go about it.

"The borrower didn't have to pay any more, so why would we have to refund them anything."

THAT ^^^.

The tolerance calculation is supposed to be between the amount on the loan estimate and the amount actually paid by or imposed upon the borrower. It says so in the regulation. If the borrower doesn't pay for the "overage," there is no violation.

If you can't get your LOS to work that way, document that you got agreement from vendor X to pay the increase, collect from the vendor and use the money to reimburse the cost of the Lender Credit used for the cure.

OK, John helped my TRID-addled brain to understand what Wyogirl was trying to say. Sorry, it's been an interesting few months and I'm sure many of my fellow compliance people can relate!

The extra cost is being picked up by another entity. So it's not a tolerance cure situation at all, it's just a split charge between the borrower and whoever else is paying the remainder of the fee. Brokers and agents can do this as long as it follows all of the other rules, correct? No net difference to the borrower = no cure. And yes, that's exactly what we were trying to do but our LOS is not picking that up. We'll have to go back to the drawing board on that.

Thanks all. Heading out for more coffee- it's too bad we can't charge a flat Caffeine Consumption Fee...