Q: What must creditors do when the amounts paid at closing exceed the amounts disclosed on the Loan Estimate beyond the applicable tolerance thresholds?
A: If the amounts paid by the consumer at closing exceed the amounts disclosed by more than the applicable tolerance threshold, the creditor must provide a corrected Closing Disclosure and provide a cure for a tolerance violation no later than 60 calendar days after consummation. The refund need not be in the form of a cash refund to the consumer. (Comment 19(f)(2)(v)-1)
For charges subject to zero tolerance, any amount charged beyond the amount disclosed on the Loan Estimate (or revised Loan Estimate, Closing Disclosure, or corrected Closing Disclosure if applicable) must be reimbursed to the consumer. (§ 1026.19(e)(3)(i))
For charges subject to a 10% cumulative tolerance, to the extent the total sum of the charges added together exceeds the sum of all such charges disclosed on the Loan Estimate (or revised Loan Estimate, Closing Disclosure, or corrected Closing Disclosure, if applicable) by more than 10%, the difference must be reimbursed to the consumer. (§ 1026.19(e)(3)(ii))
See section 12.10 below (in the Bureau’s compliance guide) for information about disclosing cures for tolerance violations on the Closing Disclosure.
NOTE: Creditors can cure tolerance violations in many ways. For example, a cure for a tolerance violation can be provided by:
Providing a refund directly to the consumer;
Providing a principal reduction;
Providing lender credits, either specific or general, to the consumer.