we charge a $200 origination fee, but offered a $200 credit.
on the GFE software input form we forgot to check a box and neither the origination fee nor the credit were carried forward to the GFE.
At closing the HUD-1 shows $0s in the GFE line 1 and line 2 - and $200 and ($200) in the HUD line 1 and 2.
So do we need to refund the $200 in order to cure the tolerance violation or can we say lines 1 and 2 net to $0 on both the GFE and HUD-1 so no refund is necessary?

Techncially, I don't believe you have a problem since the bottom line (803) equals...HOWEVER, it would be cleaner to have the HUD reflect what the GFE does...all $0's.

Based on memory, HUD clarified that a tolerance violation would be applied to 801 and 802, but not also 803 (which the reg eludes to). You have almost the reverse situation here. If the loan hasn't closed yet, I believe I'd revise the HUD to eliminate any questions.

None of our investors will buy the loan where either of the individuals lines went up - even if the net product stayed the same. THey send the loans back and tell us to cure it or they will not purchase the loan.