CFPB TRID Sec. 7 - What tolerance standard applies if the written list of service providers is not provided to the consumer or if the list is incomplete?

Compliance > Regulation Z - TILA / TRID Specific > Loan Estimates
Q:  What tolerance standard applies if the written list of service providers is not provided to the consumer or if the list is incomplete?
 
A:  Generally, if the creditor permits the consumer to shop, provides a written list, and the consumer selects a third-party service provider on the list, the charges for the settlement services are subject to the 10% cumulative tolerance standard. (§ 1026.19(e)(3)(ii)) If the consumer selects a third-party service provider that is not on the written list provided to the consumer, the charges for the settlement service may change without limitation as long as the charges disclosed on the Loan Estimate were based on the best information reasonably available to the creditor at the time of disclosure. (Comment 19(e)(3)(iii)-2)
 
If a creditor fails to provide the written list to the consumer, but the facts and circumstances indicate the consumer was permitted to shop for the settlement service, the charges for which the consumer is permitted to shop are subject to the 10% cumulative tolerance standard. However, if those charges are paid to the creditor or an affiliate, they are subject to the zero tolerance standard. (Comments 19(e)(3)(ii)-6 and 19(e)(3)(iii)-2)
 
Errors or omissions on the written list or untimely delivery of the written list may impact the tolerance standard applicable to the settlement services required to be disclosed on the written list. If the error or omission does not prevent the consumer from shopping, the charges are not paid to the creditor or an affiliate, and the consumer is otherwise considered to have shopped, the charges are subject to the 10% cumulative tolerance standard. If the error or omission does prevent the consumer from shopping, the charges are subject to the zero tolerance standard. The determination of whether the error or omission prevents the consumer from shopping is based on all of the relevant facts and circumstances. For example, a typographical error in the name of a third-party service provider on the written list might not prevent the consumer from shopping if the error does not prevent identification of the service provider. (Comments 19(e)(3)(i)-1.iv and 19(e)(3)(ii)-6)
 
Note:  Even if the consumer is considered permitted to shop when the creditor fails to provide the written list, it would still be considered a violation of § 1026.19(e)(1)(vi)(C).
 
 
This Loan Estimate / LE information can be found in the CFPB's TILA-RESPA Integrated Disclosure rule compliance guide - http://www.consumerfinance.gov/regulatory-implementation/tila-respa/
 

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