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#2102403 - 10/07/16 08:46 PM Tolerance Confusion
Luv2run Offline
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We quoted a Closing Fee of $400 on an LE for a settlement provider on our list. This provider then did not charge this fee on the CD. I am thinking I can still include this $400 in the 10% tolerance comparison for the settlement providers charges. Am I correct? I think I am confusing the per item comparison that has to take place for recording fees vs the settlement agent fees.
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#2102405 - 10/07/16 08:54 PM Re: Tolerance Confusion Luv2run
rlcarey Offline
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Galveston, TX
No. You can't include fees that were not actually charged in the aggregate total to calculate the 10% tolerance - otherwise you could just include a whole bunch of fees on the LE and pad the total.
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#2102430 - 10/10/16 02:08 PM Re: Tolerance Confusion Luv2run
Compliance NABW Offline
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You might need to clarify a little bit/provide more detail. Did they charge a different fee instead of the $400?

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#2102503 - 10/11/16 02:57 PM Re: Tolerance Confusion Luv2run
Luv2run Offline
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Yes, Justin. They did not charge the closing fee but added in an additional fee that we had not quoted. I believe we are out of tolerance by a minimal amount. Late Friday afternoon I was reading some interpretation that through me off.
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#2102505 - 10/11/16 03:03 PM Re: Tolerance Confusion Luv2run
Luv2run Offline
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This is what I had read that is still perplexing to me:

For example, assume that, in the disclosures provided pursuant to § 1026.19(e)(1)(i), the sum of all estimated charges subject to § 1026.19(e)(3)(ii) equals $1,000. If the creditor does not include an estimated charge for a notary fee but a $10 notary fee is charged to the consumer, and the notary fee is subject to § 1026.19(e)(3)(ii), then the creditor does not violate § 1026.19(e)(1)(i) if the sum of all amounts charged to the consumer subject to § 1026.19(e)(3)(ii) does not exceed $1,100, even though an individual notary fee was not included in the estimated disclosures provided pursuant to § 1026.19(e)(1)(i).
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#2102519 - 10/11/16 04:40 PM Re: Tolerance Confusion Luv2run
Compliance NABW Offline
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This one might be an issue for you.

To put the above in clear language: Assume that in the Loan Estimate, the sum of all charges subject to the 10% tolerance rule equals $1,000. if the creditor does not include a charge of $10 for a notary fee on the Loan Estimate, but the consumer is actually charged a notary fee, then the creditor does not incur a tolerance violation as long as all amounts in the "10% tolerance bucket" do not exceed $1,100. This is even if the individual notary fee was not disclosed at all.

This is based on the assumption that the notary fee is a type of charge that falls in the 10% tolerance bucket.

Your situation gets a little dicey because they charged a fee that you did not disclose and failed to charge the fee that you did disclose. Therefore, when it comes to calculating the possible tolerance violation, I do not believe you get to use the amount of the fee that you did disclose, as it is no longer a part of the transaction. To utilize numbers to make it clearer, if all of the charges in the 10% tolerance bucket, including your Closing Fee of $400, added up to $1,000 and the Closing Fee of $400 actually did happen, then you would have had $100 to "play with" for the fee that was not disclosed. However, as the $400 closing fee did not get charged, your 10% tolerance bucket drops down to an aggregate amount of $600 ($1,000 - $400). In this case anything over $660 {$600 + (10% * $600)} is a cost to cure. Unless you can somehow prove that the fee that was actually charged is inherently the same thing as the $400 Closing Fee that was disclosed, then the outline above is how I would view this.

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#2102872 - 10/13/16 05:21 PM Re: Tolerance Confusion Luv2run
Luv2run Offline
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Thank you for going into such depth Justin. Sometimes just hearing something in plain language is helpful. I agree with all that you have said. I am going to move forward with this in mind.
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#2102889 - 10/13/16 06:17 PM Re: Tolerance Confusion Luv2run
Compliance NABW Offline
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Hey, I like this stuff actually smile

Reminds me of being an examiner again.

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#2103076 - 10/14/16 05:26 PM Re: Tolerance Confusion Luv2run
Luv2run Offline
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Thank you Justin and Randy!
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#2142159 - 08/15/17 08:03 PM Re: Tolerance Confusion Compliance NABW
ItsJustMe Offline
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Joined: Dec 2009
Posts: 298
New York
Originally Posted By Justin C.
This one might be an issue for you.

To put the above in clear language: Assume that in the Loan Estimate, the sum of all charges subject to the 10% tolerance rule equals $1,000. if the creditor does not include a charge of $10 for a notary fee on the Loan Estimate, but the consumer is actually charged a notary fee, then the creditor does not incur a tolerance violation as long as all amounts in the "10% tolerance bucket" do not exceed $1,100. This is even if the individual notary fee was not disclosed at all.

This is based on the assumption that the notary fee is a type of charge that falls in the 10% tolerance bucket.

Your situation gets a little dicey because they charged a fee that you did not disclose and failed to charge the fee that you did disclose. Therefore, when it comes to calculating the possible tolerance violation, I do not believe you get to use the amount of the fee that you did disclose, as it is no longer a part of the transaction. To utilize numbers to make it clearer, if all of the charges in the 10% tolerance bucket, including your Closing Fee of $400, added up to $1,000 and the Closing Fee of $400 actually did happen, then you would have had $100 to "play with" for the fee that was not disclosed. However, as the $400 closing fee did not get charged, your 10% tolerance bucket drops down to an aggregate amount of $600 ($1,000 - $400). In this case anything over $660 {$600 + (10% * $600)} is a cost to cure. Unless you can somehow prove that the fee that was actually charged is inherently the same thing as the $400 Closing Fee that was disclosed, then the outline above is how I would view this.


I have a question regarding Justin's example. We have a situation where the recording fee was under disclosed at $275 and the title fee was over disclosed at $884 on the Loan Estimate. The actual recording fee was $351.50 and the actual title fee was $523.06. What is the bank permitted to charge in this scenario since fees were disclosed and charged, not like the notary fee example where the fee wasn't charged at all?

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#2142164 - 08/15/17 08:18 PM Re: Tolerance Confusion Luv2run
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
If the title fees are in the 10% category your aggregate 10% category disclosure was $1184. Your actual charges were $874.56 therefore you are within tolerance.

If the title fees are not in the 10% category (they were performed by a provider not on your list) then your 10% category was disclosed as $275 and the actual charge was $351.5 you therefore need to provide a $49 cure.
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#2142166 - 08/15/17 08:32 PM Re: Tolerance Confusion Luv2run
ItsJustMe Offline
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Joined: Dec 2009
Posts: 298
New York
Thank you Dan!! Each time I thought I understood the regulation correctly, I read something else that messed me up. Your response is greatly appreciated.

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#2142495 - 08/17/17 08:32 PM Re: Tolerance Confusion Luv2run
Compliance NABW Offline
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Joined: Oct 2015
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What Dan said ^

smile

Humorously, it makes a big difference if the name of the fee is actually correct. If the recording fee came out to $1, then you would have still had $1184 in your 10% bucket (if Title fee is a 10% item), and your Title fee could have actually came out to $1,200 and you wouldn't have a tolerance cure. However, if recording fee doesn't get charged at all, then you are in big trouble wink with a cure.
Last edited by Justin C.; 08/17/17 08:36 PM.
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