TRID CD Tolerance Reference
cd-tolerance-reference
Guides the agent through TRID tolerance compliance under 12 CFR § 1026.19(e)(3), comparing Closing Disclosure fees to Loan Estimate fees across zero, 10% cumulative, and unlimited tolerance categories. Use when reviewing a CD for tolerance variances, determining whether a revised LE is permitted,...
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TRID CD Tolerance Reference
Determines whether CD fees comply with TRID tolerance limits set by the most recent valid LE, and calculates any required cure.
Prerequisites
- Most recent valid LE (original or revised) with line-item fees
- Final CD with line-item fees
- Lender's written list of service providers (classifies shopped services)
- Documentation of any changed circumstances supporting a revised LE
Tolerance Categories
Authority: 12 CFR § 1026.19(e)(3). Always compare CD fees to the most recent valid LE.
| Category | Rule | Measurement |
|---|---|---|
| Zero | Cannot increase at all | Per item |
| 10% Cumulative | CD category total ≤ LE total × 110% | Aggregate |
| Unlimited | May change freely (good faith at LE required) | None |
Zero Tolerance (0%)
Any increase from LE to CD is a violation requiring cure.
| Category | Examples |
|---|---|
| Creditor/broker fees | Origination, application, underwriting, processing, discount points, commitment, rate lock |
| Affiliate fees | Any fee to entity affiliated with creditor/broker |
| Transfer taxes | State/local transfer taxes, mansion tax, documentary stamps |
| Services borrower cannot shop | Appraisal (creditor-selected), credit report, flood determination, tax monitoring |
Compliant: every item variance ≤ $0. Any positive variance = cure amount.
10% Cumulative Tolerance
Measured as category aggregate, not per item.
| Category | Examples |
|---|---|
| Recording fees | Deed recording, mortgage recording, other recording |
| Shopped services from lender's list | Title policies, title search, settlement/closing fee, notary, survey, pest inspection, settlement attorney |
If borrower chose a provider not on lender's written list, that fee moves to unlimited tolerance.
Cure calculation:
- Maximum permitted = LE total × 110%
- Excess = CD total − maximum permitted (if positive)
Unlimited Tolerance
No cure required. Includes:
- Prepaid interest, insurance premiums (homeowner's, flood, hazard)
- Initial escrow deposits (taxes, insurance, MIP, aggregate adjustment)
- Property costs not required by creditor (prepaid taxes, HOA)
- Services where borrower chose provider off lender's list
- Optional services (home warranty, optional owner's title, non-required inspections)
Changed Circumstances
A valid changed circumstance permits a revised LE that resets tolerances for affected fees only. Per 12 CFR § 1026.19(e)(3)(iv):
- Deliver revised LE within 3 business days of learning of the change
- At least 4 business days before consummation
| Type | Examples |
|---|---|
| Extraordinary event | Natural disaster, war, civil unrest |
| Information inaccuracy | Income/assets differ; property differs from disclosed |
| Previously unavailable info | Title defect, survey encroachment |
| Borrower-requested change | Different product, property, or added borrower |
| Rate lock | Borrower locks after floating |
| LE expiration | Closing delayed beyond 10 business days after LE |
Invalid reasons: creditor error, market fluctuation, processing delays, simple underestimates, bad-faith original estimate.
Cure Requirements
Authority: 12 CFR § 1026.19(f)(2)(v). All within 60 calendar days after consummation:
- Refund excess amount to borrower
- Provide corrected CD reflecting the cure
- Document cure in loan file
| Category | Maximum Permitted | Cure |
|---|---|---|
| Zero tolerance | = LE amount | CD − LE (if positive) |
| 10% cumulative | = LE total × 110% | CD total − max permitted (if positive) |
Pitfalls
| Mistake | Correction |
|---|---|
| Testing 10% items individually | Measure as cumulative category total |
| Applying 10% to affiliate fees | Affiliate fees are zero tolerance |
| Changed circumstance increasing unrelated fees | Only revise affected fees |
| Revised LE > 3 business days after learning of change | Must issue within 3 business days |
| Comparing net fees after credits | Compare gross fees; credits don't affect tolerance |
| Missing 60-day cure deadline | Calendar from consummation date |
Key Rules
- Seller credits don't affect tolerance — always compare gross fees
- Specific lender credits tied to a fee reduce it for tolerance; general credits do not
- Construction loans: tolerances apply separately per phase
- Subordinate financing: each loan has independent tolerances; no fee-shifting between loans
- Always verify affiliate status — misclassification as 10% item is a common exam finding
References
- 12 CFR § 1026.19(e)(3) — Tolerance categories
- 12 CFR § 1026.19(e)(3)(iv) — Changed circumstances
- 12 CFR § 1026.19(f)(2)(v) — Cure requirements
- CFPB Official Interpretation, Comments 19(e)(3)(i)-1 through -6
- CFPB Official Interpretation, Comments 19(e)(3)(iv)-1 through -6
- CFPB TRID Small Entity Compliance Guide, Section 7