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The new rules — just like the existing RESPA rules — contain tolerance violations for charges that increase at the closing from the original charge on the initial estimate. The rules however, do not refer to them as tolerance violations, they refer to them as "variances." The three categories are:
- Charges that cannot increase at closing
- Charges that — in total — cannot increase more than ten percent
- Charges that can change
The first category, charges that cannot increase, has been greatly expanded under the new rules to not only include origination fees and borrower paid transfer tax, but also fees charged by an affiliate of the creditor or broker and charges for other types of services for which the borrower is not permitted to shop.
For instance, if the lender owns a subsidiary company that provides tax service notification and the subsidiary provides that service in connection with a loan, the charge for that service, once disclosed on the estimate, cannot increase at closing. If the borrower is not permitted to shop for a service such as appraisal, then that charge cannot increase at closing.
The second category of charges that, in the aggregate, cannot increase by more than ten percent include services such as recording fees and charges for services the consumer shopped for using the creditor's provider list.
The third category reflect those charges that can change and includes prepaid interest, impound account set up, homeowner's insurance, property taxes and charges for which the borrower chose a service provider not on the creditor's list as well as any other
non–loan related charges.
The Closing Disclosure neither groups the charges by category like the 2010 HUD, nor has a side–by–side itemized comparison of the estimated charges next to the actual charges. Therefore, the settlement agent will likely never be able to determine if there is a variance.
As a result, the new rules allow the lender thirty days post-closing to audit their files for a variance and another thirty days to refund money to the borrower to cure the variance for a total of sixty days. The payment to cure the variance would need to be shown on an amended Closing Disclosure by the preparer of the initial Closing Disclosure – either the lender or the settlement agent.
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