Q: What tolerance standard applies to the Total of Payments on the Closing Disclosure?
A: Generally, the Total of Payments is considered accurate if it:
There are separate tolerances that apply to the disclosure of the Total of Payments for purposes of the right of rescission for certain refinance transactions, including after the initiation of foreclosure on the consumer’s principal dwelling that secures the credit obligation. (§§ 1026.23(g)(1)(ii), (g)(2)(ii) and (h)(2)(ii))
The Total of Payments calculation does not include charges for principal, interest, mortgage insurance, or Loan Costs that are offset by another party through a specific credit, such as a specific lender or seller credit. However, general credits may not be used to offset amounts for purposes of calculating the Total of Payments. (Comment 38(o)(1)-1)
Note: In addition to the Total of Payments tolerances, Regulation Z’s preexisting finance charge tolerance extends to any disclosure affected by the finance charge, including the Total of Payments, as long as a misdisclosure of the Total of Payments resulted from a misdisclosure of the finance charge. Conversely, a misdisclosure of the Total of Payments that does not result from a misdisclosure of the finance charge is not subject to the finance charge tolerances (but the Total of Payments tolerances still apply).