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Fire/Hazard Insurance on a Mortgage Loan

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Question: 
If the lender provides the fire and hazard insurance on a mortgage loan, is this a zero tolerance for the loan estimate? While one can do a pretty good job using MLS / Internet to come up with an insurance value, but this amount could change when reviewing, say an insurance review that would be obtained prior to the closing disclosure. Say MLS cited 800 sq ft, but the insurance review cited 1200, or even if a for sale by owner, (FSBO), with limited "online" information, the insurance review comes back noting a custom kitchen, flooring, bath etc. when this was not known up front.
Answer: 

When the creditor receives information that it should realize make the estimated costs on its Loan Estimate inaccurate to the point of creating a potential good faith tolerance violation, and the change is based on new information not previously considered or known by the creditor, the creditor must provide a revised loan estimate within 3 business days of obtaining that information to adjust the base estimate for the purposes of comparing actual costs paid by the consumer with the costs on the loan estimate.

If the creditor fails to meet that three-business-day deadline for providing or sending a revised loan estimate, the comparison at closing will be between the actual costs paid by the consumer and those costs as disclosed on the first loan estimate.

The scenarios in your question appear to meet the requirements for new information not previously considered so that you would be able to increase your cost estimates on a timely revised loan estimate.

First published on 01/17/2021

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