Q: What are changed circumstances that affect settlement charges?
A: A changed circumstance affects settlement charges if it causes an estimated charge to increase by more than the applicable tolerance or, in the case of estimated charges subject to the 10% cumulative tolerance, causes the sum of those charges to increase by more than the 10% tolerance. (§ 1026.19(e)(3)(iv)(A); Comment 19(e)(3)(iv)(A)-1)
Examples of changed circumstances affecting settlement costs include (Comment 19(e)(3)(iv)(A)-2):
A natural disaster, such as a hurricane or earthquake, damages the property or otherwise results in additional closing costs.
The creditor disclosed a charge for title insurance, but the title insurer goes out of business during underwriting,
New information not relied upon when providing the charges is discovered, such as a neighbor of the seller filing a claim contesting the boundary of the property to be sold.
NOTE: Creditors are not required to collect all six pieces of information constituting the consumer’s application—i.e., the consumer’s name, monthly income, social security number to obtain a credit report, the property address, an estimate of the value of the property, or the mortgage loan amount sought—prior to issuing the Loan Estimate. However, creditors are presumed to have collected this information prior to providing the Loan Estimate and may not later collect it and claim a changed circumstance. For example, if a creditor provides a Loan Estimate prior to receiving the property address from the consumer, the creditor cannot subsequently claim that the receipt of the property address is a changed circumstance. (Comment 19(e)(3)(iv)(A)-3)