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#2177123 - 05/08/18 01:25 PM Tolerance Cure due to LE rounding
happyhelen Offline
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Joined: Nov 2017
Posts: 3
We need clarification on a tolerance issue regarding LE and CD fees.

Based on the regulation, all fees on the LE must be rounded as stated below:

Paragraph 37(o)(4)(i)(A).
1. Rounding of dollar amounts.
Section 1026.37(o)(4)(i)(A) requires that certain dollar amounts be rounded to the nearest whole dollar. For example, pursuant to § 1026.37(o)(4)(i)(A), periodic mortgage insurance payments of $164.50 are required to be disclosed under § 1026.37(c)(2)(ii) as $165. However, if the periodic mortgage insurance payment equaled $164.49, the creditor would disclose $164.

We need to know how to handle this when we know and enter an exact fee, it is rounded down on the LE and then it appears we under disclosed on the LE and need to issue a tolerance due to the rounding.

For example, the credit report is $53.15. We know it, enter it in system, but LE regulation forces system to round to $53. When we issue the CD at $53.15 it appears we under disclosed by $.15 cents; hence appearing to have to issue a tolerance cure of $.15.

Why would we need to issue a $.15 credit, when we in good faith entered the exact cost? Are we interpreting the regulation correctly?

Thank you in advance for any feedback!

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#2177124 - 05/08/18 01:32 PM Re: Tolerance Cure due to LE rounding happyhelen
rlcarey Offline
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Joined: Jul 2001
Posts: 83,226
Galveston, TX
You use unrounded numbers for cure purposes.

19(e)(3) Good faith determination for estimates of closing costs.

19(e)(3)(i) General rule.

7. Use of unrounded numbers. Sections 1026.37(o)(4) and 1026.38(t)(4) require that the dollar amounts of certain charges disclosed on the Loan Estimate and Closing Disclosure, respectively, to be rounded to the nearest whole dollar. However, to conduct the good faith analysis required under § 1026.19(e)(3)(i) and (ii), the creditor should use unrounded numbers to compare the actual charge paid by or imposed on the consumer for a settlement service with the estimated cost of the service.
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#2177135 - 05/08/18 01:56 PM Re: Tolerance Cure due to LE rounding happyhelen
RR Joker Offline
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The Swamp
I think that's what prompted the question, Randy. It does seem crazy to refund .15 cents when the rounding is due to the regulatory requirement. I'm assuming it should be ignored. I've never had a rounded down number to deal with, but I think that's what I would do!
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#2177138 - 05/08/18 02:01 PM Re: Tolerance Cure due to LE rounding happyhelen
raitchjay Online
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OK
I think Randy's answer is saying you don't compare the actual cost to the rounded number...you compare it to the unrounded number. I know my LOS considers the unrounded number and doesn't try to force tolerance cures in that manner.
Last edited by raitchjay; 05/08/18 02:02 PM.
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#2177143 - 05/08/18 02:20 PM Re: Tolerance Cure due to LE rounding happyhelen
rlcarey Offline
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Posts: 83,226
Galveston, TX
Correct - tolerance cures are based on the original unrounded estimate and not the number that is rounded that appears on the LE.
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#2177264 - 05/08/18 08:08 PM Re: Tolerance Cure due to LE rounding happyhelen
Compliance NABW Offline
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I had to argue this with investors trying to ding our institution for $.23 cures and such when TRID first came out. The analysis is based on the underlying math in your system, not the rounded LE.

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