[NMLS SAFE] 7, TRID Part 2: Closing Disclosure, Tolerances and Cures

Lesson seven of the free Quibank NMLS SAFE course. TRID part two: the Closing Disclosure, the three changes that restart its clock, and the tolerance buckets. This is where TRID questions get hard — and where knowing three short lists wins the points. The Closing Disclosure must be received by the borrower at least three business days before consummation.

And here is the exam's favorite twist: after the borrower has it, most changes do not restart that clock. Only three do. The three re-set triggers: the disclosed APR becomes inaccurate. The loan product changes — say, fixed rate to adjustable.

Or a prepayment penalty is added. Any of those three: corrected disclosure, plus a fresh three-business-day wait. Anything else — a fee shifts, the seller sweetens the deal — corrected disclosure, but no new wait. So: which change requires both a corrected Closing Disclosure and a new three-day waiting period?

The product switching from fixed to adjustable. A bigger seller credit, a higher recording fee, a pricier insurance premium — those need correction, not delay. Now tolerances — how much the final charges may exceed the Loan Estimate. Three buckets.

Zero tolerance: the creditor's and broker's own fees, fees paid to the creditor's affiliates, fees for services the borrower cannot shop for, and transfer taxes. Those may not increase at all. Ten percent cumulative: recording fees, plus services the borrower shopped for from the creditor's written list. And unlimited: prepaid interest, and things the consumer chooses independently, like hazard insurance.

The exam's favorite from that list: which charge is zero tolerance? A transfer tax. People file taxes under government fees and guess ten percent — but transfer taxes sit in the zero bucket, right next to the lender's own fees. Recording fees are the ten-percent ones.

Last rule: the cure. If the creditor discovers a tolerance violation after closing, it can fix it — refund the excess to the consumer and deliver a corrected Closing Disclosure no later than sixty calendar days after consummation. Sixty days, calendar, counted from consummation. Exam version.

Twenty days after closing, the creditor finds it blew the ten percent bucket. It must refund the excess and deliver the corrected disclosure within sixty calendar days after consummation — not thirty, not three business days after discovery. Recap. Closing Disclosure: in the borrower's hands three business days before closing.

Only three things restart it: APR inaccurate, product change, prepayment penalty added. Tolerances: zero for lender, affiliate, non-shoppable fees and transfer taxes; ten percent cumulative for recording fees and list-shopped services; unlimited for prepaid interest and consumer-chosen services. Cure window: sixty calendar days. Next lesson: HOEPA high-cost loans, and the originator compensation rules.

Practice today's rules free at quibank.com/mlo. See you in lesson eight.