> "Save this Loan Estimate to compare with your Closing Disclosure."
Prerequisites
- 9
- 21
Learning Objectives
- Explain what the four pre-2015 disclosure forms were, why they failed borrowers, and what the TILA-RESPA Integrated Disclosure rule replaced them with.
- Read a Loan Estimate page by page and say what each box is for and which figures it commits the creditor to.
- State both Regulation Z definitions of 'business day,' name which timing rule each one governs, and count a deadline correctly under each.
- Read a Closing Disclosure page by page, locate the five Loan Calculations figures, and verify that the disclosure's own arithmetic holds.
- Classify any settlement charge into the zero-tolerance, ten-percent-cumulative, or unlimited bucket, and perform the cumulative test in dollars.
- Identify a valid changed circumstance, document it, and say what happens to a lender that cannot.
- Determine whether a change before consummation requires only a corrected Closing Disclosure or a new three-business-day waiting period.
In This Chapter
- Overview
- Learning Paths
- 22.1 What TRID replaced and why
- 22.2 The Loan Estimate, page by page
- 22.3 The three-business-day delivery rules (both of them)
- 22.4 The Closing Disclosure, page by page
- 22.5 Changed circumstances
- 22.6 Tolerances: zero, ten percent, unlimited — and curing a violation
- 22.7 What triggers a new three-day wait
- 22.8 The LE-to-CD comparison a borrower will actually make
- 22.9 Record retention and the audit trail
- 22.10 The TRID calendar, drawn
- 🗂️ The Loan File
- Conclusion
- Key Terms
- Spaced Review
Chapter 22: The Closing Disclosure and TRID: The Three-Day Rule and Compliance That Can't Be Wrong
"Save this Loan Estimate to compare with your Closing Disclosure." — the sentence Regulation Z requires to be printed at the top of every Loan Estimate
Overview
There is a category of mistake in this business that costs you a borrower, and a category that costs you a file, and then there is this chapter, which is the category that costs you the license.
Most of what a loan officer does wrong is recoverable. You quote a rate you have not priced and you apologize and reprice it. You miss a condition and you chase it and you close four days late. You misread a paystub and the underwriter catches it. None of that is good, and all of it is survivable, because the people around you — the processor, the underwriter, the closer — are a system built to catch exactly those errors before they reach the borrower.
Disclosure timing is different. It is different because the clock does not care whether anyone noticed. If the Closing Disclosure reached your borrower on a Wednesday and the closing is Friday, the closing does not happen on Friday, and no amount of goodwill, urgency, or explanation changes that. It is different because a tolerance violation is not an argument you can win at the table; it is arithmetic, and the arithmetic is done afterward, by someone in quality control who was not there. And it is different because the remedy comes out of somebody's pocket — sometimes the lender's, and on a bad file, out of the settlement the lender pays when a pattern shows up in an examination.
The rule that governs all of this is the TILA-RESPA Integrated Disclosure rule, universally called TRID, and it did something genuinely useful: it took four confusing forms produced under two different statutes by two different agencies and turned them into two forms that a normal person can actually compare. The Loan Estimate goes out near the beginning. The Closing Disclosure arrives near the end. They are laid out to be put side by side on a kitchen table, and the borrower is meant to be able to see, in about ninety seconds, whether the loan they were promised is the loan they are being asked to sign.
That is the consumer-protection story, and it is real. The operational story is that TRID imposes a calendar on your file that runs on two different definitions of the word "day," and that the difference between them is one day, and that one day is the difference between closing on Friday and explaining to a family with a moving truck why they cannot.
This chapter teaches the forms, the clocks, the tolerances, and the cure. It is the most tested material on the SAFE MLO test in this part of the book, and it is also, unusually, material where being right matters more than being fast.
In this chapter, you will learn to:
- Say what TRID replaced and why the old forms failed
- Read a Loan Estimate and a Closing Disclosure page by page
- Count a deadline correctly under both definitions of "business day"
- Classify any charge into its tolerance bucket and run the cumulative test in dollars
- Recognize a valid changed circumstance, and document it before you rely on it
- Cure a tolerance violation, correctly and on time
- Tell the difference between a corrected disclosure and a new three-day waiting period
Learning Paths
🎓 Exam — §22.3, §22.6, and §22.7 are the highest-yield sections in Part IV. If you learn one thing perfectly, learn the two definitions of business day and which rule each governs. 🏠 New LO — §22.5, §22.6, and §22.8. Changed circumstances are the ones you personally cause or prevent, and §22.8 is the conversation you will have on every file. 🤝 Partner — §22.3 and §22.7. A real estate agent who understands what does and does not restart the clock stops asking lenders to do impossible things three days before closing. 📊 Operations — §22.9 and §22.10. The audit trail and the calendar are the operational core; the forms are downstream of both.
22.1 What TRID replaced and why
Before October 3, 2015, a borrower buying a house received four separate federal disclosure forms about the same loan.
Two of them came out near the beginning. The Good Faith Estimate (GFE) was a Real Estate Settlement Procedures Act form, produced under Regulation X, administered at that time by the Department of Housing and Urban Development, and it estimated settlement charges. The initial Truth in Lending disclosure was a Truth in Lending Act form, produced under Regulation Z, administered by the Federal Reserve Board, and it disclosed the annual percentage rate, the finance charge, the amount financed, and the total of payments.
Two more came out at the end. The HUD-1 Settlement Statement was the RESPA form showing the actual settlement charges. The final Truth in Lending disclosure was the Reg Z form showing the actual APR.
Four forms, two statutes, two regulators, two vocabularies, and — this is the part that mattered — no consistent way to line them up. The GFE grouped charges one way and the HUD-1 grouped them another. The Truth in Lending form spoke a language ("amount financed," "finance charge") that no borrower had ever heard and that no settlement agent used. A borrower who wanted to know whether the loan they were closing was the loan they had been quoted had to reconcile four documents that were not designed to be reconciled, and most of them, sensibly, gave up.
The Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in 2010 in the wake of a foreclosure crisis in which an enormous number of households had signed loans they did not understand, directed the newly created Consumer Financial Protection Bureau to combine the TILA and RESPA mortgage disclosures into a single integrated set of forms. The Bureau launched the project publicly in 2011 under the name Know Before You Owe, published successive prototype forms for public comment, tested them with consumers and industry participants, and issued the final rule in November 2013. The rule took effect on October 3, 2015, after a short delay from an originally announced August 1, 2015 date.
What came out the other end is two forms:
WHAT TRID REPLACED [structure; dates are public record]
BEFORE OCTOBER 3, 2015 ON AND AFTER OCTOBER 3, 2015
──────────────────────────────────── ──────────────────────────────────────────
Good Faith Estimate (RESPA) ┐
├──► LOAN ESTIMATE 3 pages
initial Truth in Lending (TILA) ┘ "here is what we think this loan will be"
HUD-1 Settlement Statement (RESPA) ┐
├──► CLOSING DISCLOSURE 5 pages
final Truth in Lending (TILA) ┘ "here is what this loan actually is"
Two statutes, two agencies, four One rule, one agency, two forms designed
forms, no common vocabulary. to be laid side by side and compared.
Two structural facts about the new regime are worth stating plainly, because they explain nearly everything that follows.
First, the forms are built as a matched pair. Page 1 of the Loan Estimate and page 1 of the Closing Disclosure use the same three boxes in the same order — Loan Terms, Projected Payments, Costs at Closing — with the same line labels. Page 2 of each uses the same lettered sections A through J for closing costs. This is not decoration. It is what makes the comparison in §22.8 possible for a borrower with no financial training, and it is what makes a tolerance test possible for a compliance analyst reading two documents six months later.
Second, the Loan Estimate is not merely an estimate. This is the single largest change from the old Good Faith Estimate world, and new loan officers underrate it constantly. Certain figures on the Loan Estimate are promises. If the actual charge at closing exceeds what you disclosed, and the charge falls in the wrong bucket, the creditor pays the difference. Not the borrower. Not the settlement agent. The creditor. §22.6 works this in dollars on the Linden Street file, and it is the reason the phrase "good faith" appears in the regulation at all: the standard for a disclosed charge is whether the estimate was made in good faith, and good faith is measured, mostly, by whether the number came true.
Which loans are covered. TRID applies to most closed-end consumer credit transactions secured by real property. A conventional purchase like the Linden Street file is squarely covered, as are FHA, VA, and USDA loans, refinances, and most construction loans. A short list of transactions sits outside it — home equity lines of credit, reverse mortgages, and loans secured by a dwelling that is not attached to real property are the ones you will meet — and those use different disclosure regimes. Before you disclose on anything unusual, confirm which form set applies. Getting that wrong at the front of a file is not recoverable at the back of it.
📞 On the Phone
Borrower, day 48, forty minutes after the Closing Disclosure lands in their inbox: "This says my annual percentage rate is 7.253 percent. You told us six and five eighths. Did our rate go up?"
The wrong answer: "No, no, that's just a legal thing, ignore it."
It is not a legal thing and they should not ignore it, and if you say that you have taught them that the disclosures are theater — which is precisely the belief TRID exists to correct, and precisely the belief that will make them sign anything you hand them next time.
What actually works: "Your interest rate is 6.625% and it has not moved since we locked it on day twelve. Look at the top box on page one — Interest Rate, 6.625%, and next to it, 'Can this amount increase after closing?' No. The 7.253% is a different measurement. It is the cost of the loan expressed as a rate, so it includes your mortgage insurance and the fees you paid up front to get this rate. It is always higher than the note rate when there are costs, and it exists so you can compare two lenders who bury their costs differently. Your payment is \$2,341.94 of principal and interest, exactly what page one says. Pull up the Loan Estimate I sent you on day twelve and let's put them side by side — that is literally what the form is for."
Chapter 4 built the APR. Your job on day 48 is to know where it sits on the form and to be able to say, without hedging, why it is not the interest rate.
22.2 The Loan Estimate, page by page
The Loan Estimate is three pages. Chapter 9 covered what triggers it — the six items that constitute an application, and the intent to proceed that must follow it — so we start here from the assumption that the trigger has fired and the form has to go out.
On the Linden Street file it fired on day 5, a Monday. The day-1 pre-approval named no subject property, so the six items were not complete and the clock had not started; when the contract was executed on day 4 and the full application was taken on day 5, the address arrived and the six items closed. The Loan Estimate went out the same day.
Page 1 — the four boxes that matter
Page 1 carries the identifying information (date issued, applicants, property, sale price, loan term, purpose, product, loan type, loan identification number) and then four things a borrower can actually use.
The rate lock box. A checkbox — NO or YES — and if yes, the date and time the lock expires. If the loan is not locked, the form states that the interest rate, points, and lender credits can change until it is. It also carries a separate expiration date and time for the other estimated closing costs, which is a different deadline from the rate lock and is routinely confused with it.
Loan Terms. Loan amount, interest rate, monthly principal and interest, prepayment penalty, balloon payment — each with a second column answering "Can this amount increase after closing?" That second column is the best single piece of design in the whole rule. It converts a product feature into a question a frightened person can answer.
Projected Payments. The estimated total monthly payment, broken into principal and interest, mortgage insurance, and estimated escrow, and split into periods wherever the payment changes over the life of the loan. Beneath it, the estimated taxes, insurance, and assessments, with checkboxes showing which of them are escrowed.
Costs at Closing. Two numbers: estimated closing costs and estimated cash to close.
Here is the operative Loan Estimate on the Linden Street file. Note the word operative: it is not the first one. The first Loan Estimate went out day 5 with the loan floating at 6.750% and no discount point. The rate was locked on day 12 at 6.625% with 0.500 point, and locking a previously floating rate requires a revised Loan Estimate. That revised form — not the day-5 one — is the baseline for the rate-dependent charges, and §22.5 explains why.
LOAN ESTIMATE — PAGE 1 OF 3 (revised, issued day 12) [the Linden Street file]
Save this Loan Estimate to compare with your Closing Disclosure.
DATE ISSUED day 12 LOAN TERM 30 years
APPLICANTS two borrowers PURPOSE Purchase
PROPERTY 4412 Linden Street, Ridgeview
SALE PRICE $385,000 PRODUCT Fixed Rate
LOAN TYPE [x] Conventional [ ] FHA [ ] VA [ ] ____
LOAN ID # 2500-LIN-4412
RATE LOCK [ ] NO [x] YES, until day 42 at 5:00 p.m.
Before closing, your interest rate, points, and lender credits can change unless you lock
the interest rate. All other estimated closing costs expire on day 19 at 5:00 p.m.
LOAN TERMS Can this amount increase after closing?
────────────────────────────────────────────────────────────────────────────────────────
Loan Amount $365,750 NO
Interest Rate 6.625% NO
Monthly Principal & Interest $2,341.94 NO
Prepayment Penalty — NO
Balloon Payment — NO
PROJECTED PAYMENTS
────────────────────────────────────────────────────────────────────────────────────────
Payment Calculation YEARS 1-12 YEARS 12-30
Principal & Interest $2,341.94 $2,341.94
Mortgage Insurance + 176.78 + 0
Estimated Escrow + 504.00 + 504.00
Estimated Total Monthly Payment $3,022.72 $2,845.94
Estimated Taxes, Insurance $504.00 [x] Property Taxes
& Assessments a month [x] Homeowner's Insurance
Amount can increase over time [ ] Other
COSTS AT CLOSING
────────────────────────────────────────────────────────────────────────────────────────
Estimated Closing Costs $14,181.27 Includes $8,363.25 in Loan Costs +
$5,818.02 in Other Costs - $0 in
Lender Credits. See page 2 for details.
Estimated Cash to Close $25,431.27 Includes Closing Costs. See Calculating
Cash to Close on page 2 for details.
Constructed rendering. The model form is H-24 in Appendix H to Regulation Z.
📄 Read the File
text FIGURE 22.1 — "The Loan Estimate that became the baseline" [the Linden Street file] THE DOCUMENT Revised Loan Estimate, page 1 of 3, issued day 12 — the same day the rate was locked. It replaces the original Loan Estimate of day 5 for the charges the lock affected. Constructed rendering; the model form is H-24 in Appendix H to Regulation Z. THE CONTEXT A $385,000 purchase, 5% down, conventional 30-year fixed. On day 5 the loan was floating and the form showed 6.750% at par with no discount point and principal and interest of $2,372.25. On day 12 the borrowers locked 6.625% and bought 0.500 point for $1,828.75. That is a charge that did not exist on the day-5 form, and it is a $1,828.75 charge in Section A, where the tolerance is zero. WHAT IT SHOWS The rate is locked and the lock has an expiration: day 42 at 5:00 p.m. Loan amount $365,750, rate 6.625%, principal and interest $2,341.94, and four NOs in the increase column — no adjustment, no prepayment penalty, no balloon. The projected payment breaks at the point where mortgage insurance terminates. Estimated closing costs $14,181.27 and estimated cash to close $25,431.27. WHAT IT DOESN'T It does not tell you which charges are subject to which tolerance — that is on page 2, and even there you have to know whether the borrower chose a provider from the written list. It does not promise the escrow figure: $504.00 a month is an estimate built on the seller's current tax bill, and the county will reassess. It does not disclose that the lock expires nine days before the file will actually be clear to close. And "Can this amount increase after closing?" answers a question about the LOAN, not about the CLOSING — every NO in that column is still true on a file whose cash to close moves. THE DECISION Two things, on day 12, in this order. Put the lock expiration on the calendar as a hard date, not a note — day 42 is a Wednesday and the contract closing date is day 45. Three days of float on a file with eleven conditions is not float. Then call the borrowers and walk the changed numbers before they read them: the point they bought is why closing costs went up $1,828.75, and the payment went down $30.31. THE LESSON The operative Loan Estimate is the most recent VALID one, not the first one — and a revised Loan Estimate resets the baseline only for the charges the reason for revision actually affected. Locking the rate reset Section A. It did not reset the title fees, and a lender who thinks otherwise will discover it in a post-close audit.
Page 2 — the closing costs, in ten lettered blocks
Page 2 is the working page. It divides every charge into Loan Costs and Other Costs, and subdivides each:
| Block | Contains | Why the block exists |
|---|---|---|
| A. Origination Charges | points, origination fee, underwriting fee, application fee, rate-lock fee | everything the creditor charges for making the loan |
| B. Services You Cannot Shop For | appraisal, credit report, flood determination, tax service | third-party services the creditor selects |
| C. Services You Can Shop For | title, settlement, survey, pest | third-party services the borrower may choose |
| D. Total Loan Costs | A + B + C | the subtotal a borrower compares between lenders |
| E. Taxes and Other Government Fees | recording fees, transfer taxes | payments to a government, not to a business |
| F. Prepaids | prepaid interest, first-year homeowners insurance, prepaid taxes | costs of ownership paid at closing, not costs of the loan |
| G. Initial Escrow Payment at Closing | the months of taxes and insurance collected to seed the escrow account | Chapter 23 owns the escrow account itself |
| H. Other | owner's title insurance, optional inspections, real estate commissions | charges neither the creditor nor the government requires |
| I. Total Other Costs | E + F + G + H | — |
| J. Total Closing Costs | D + I, less lender credits | the number on page 1 |
Page 2 of the Loan Estimate also carries the Calculating Cash to Close table, which walks from total closing costs through the down payment, the deposit already paid, seller credits, and other adjustments to the estimated cash to close.
Two things about the lettered blocks that experienced people still get wrong.
The block a charge sits in is not the same thing as its tolerance bucket. Section C — services the borrower can shop for — contains charges in two different buckets, depending entirely on whether the borrower chose a provider from the written list the creditor supplied. Same section, same page, different rule. §22.6 works this on the Linden Street survey fee.
Section H is where optional charges live, and "optional" is a legal characterization, not a courtesy. Owner's title insurance on the Linden Street file — \$875 — protects the buyer, not the lender. Chapter 21 explained why a first-time buyer should almost always buy it anyway. On the form it is labeled optional, and if you have not explained the word before the borrower reads it, you will spend day 48 explaining it under time pressure.
Page 3 — comparisons and other considerations
Page 3 carries three boxes. Comparisons shows, in five years, the total the borrower will have paid and the amount of principal paid off, plus the annual percentage rate and the Total Interest Percentage. Other Considerations covers appraisal, assumption, homeowner's insurance, late payment, refinance, and servicing. Confirm Receipt is a signature line, and its presence is a choice: if the creditor requires a signature it appears; if not, the form instead carries a statement that the borrower does not have to accept the loan because they received the form or signed an application.
Say that last part out loud to a borrower. Signing a Loan Estimate confirms they received it. It does not commit them to the loan and it is not an intent to proceed. Chapter 9 owns intent to proceed; the two get conflated at kitchen tables constantly.
22.3 The three-business-day delivery rules (both of them)
This is the section. If you read nothing else in this chapter carefully, read this.
Regulation Z defines "business day" twice, and the two definitions produce different answers on the same calendar. Which one applies depends on which timing rule you are counting. Getting it backwards produces one of two outcomes, and both are bad: you close a day early, which is a violation, or you close a day late, which costs your borrower a day of interest, your lender a lock day, and your reputation with a real estate agent who now believes you cannot count.
The two definitions
The general definition. A business day is a day on which the creditor's offices are open to the public for carrying on substantially all of its business functions. This is a fact about your employer, not about the calendar. If your company's offices are open Monday through Friday and closed Saturday and Sunday, your business days are Monday through Friday. If your company runs a full retail operation on Saturday — some depositories do — Saturday may count for you and not for the lender across the street. The definition is deliberately about substantially all business functions: a skeleton weekend staff taking phone applications is generally not the whole business being open, but that determination belongs to your compliance department, not to you.
The precise definition. A business day is all calendar days except Sundays and the legal public holidays specified in 5 U.S.C. 6103(a). This one has nothing to do with your employer. Saturday counts. Sunday never counts. Federal holidays never count. Eleven federal legal public holidays are named in that statute — New Year's Day, the Birthday of Martin Luther King Jr., Washington's Birthday, Memorial Day, Juneteenth National Independence Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day.
There is a wrinkle in the commentary worth knowing about: four of those holidays are named by a specific date rather than by a day of the week — January 1, July 4, November 11, and December 25 — and when one of those dates falls on a weekend and federal offices observe the holiday on an adjacent weekday, the treatment of the observed day differs from the treatment of the named date. Know that the wrinkle exists, and take the specific answer from your compliance department rather than from memory. It shows up two or three times a year and it is exactly the kind of detail that produces a violation nobody noticed.
Which definition governs which rule
THE TWO CLOCKS [structure; verify current rule]
GENERAL DEFINITION PRECISE DEFINITION
"creditor's offices open to the "all calendar days except Sundays
public for substantially all and federal legal holidays"
business functions" Reg Z 1026.2(a)(6), second sentence
Reg Z 1026.2(a)(6), first sentence
───────────────────────────────── ────────────────────────────────────────
Deliver or mail the LOAN ESTIMATE The 7-BUSINESS-DAY WAITING PERIOD between
within 3 business days of receiving delivery of the Loan Estimate and the
the consumer's application. earliest permissible consummation.
The 3-BUSINESS-DAY RECEIPT rule: the
consumer must RECEIVE the Closing
Disclosure no later than 3 business days
before consummation.
The MAILBOX PRESUMPTIONS: a disclosure not
delivered in person is presumed received 3
business days after it is delivered or
placed in the mail.
RESCISSION, where a right of rescission
exists at all (Chapter 24).
───────────────────────────────── ────────────────────────────────────────
SATURDAY usually does NOT count SATURDAY ALWAYS COUNTS
A handful of other TRID deadlines run on business days too — the deadline to issue a revised Loan Estimate after a changed circumstance, and the point at which a Loan Estimate expires if the consumer has not indicated intent to proceed. Regulation Z enumerates by citation exactly which timing rules take the precise definition, and the CFPB's small-entity compliance guide sets it out in a table. For the rules above, be certain. For anything else, look it up before you count it, and do not assume the answer is the same as the rule next to it.
Counting, three times, on the Linden Street file
Count one — the Loan Estimate delivery deadline, general definition. The six application items completed on day 5, a Monday. The creditor's offices are open Monday through Friday. The deadline is the third business day after receiving the application:
LOAN ESTIMATE DELIVERY — GENERAL DEFINITION [the Linden Street file]
day 5 Mon application complete <- day zero; the day of receipt is not counted
day 6 Tue business day 1
day 7 Wed business day 2
day 8 Thu business day 3 <- DEADLINE. Deliver or place in the mail by today.
Actual: the Loan Estimate was delivered on day 5. Three business days early.
Count two — the seven-business-day waiting period, precise definition. Consummation may not occur earlier than the seventh business day after the Loan Estimate is delivered or placed in the mail. The Loan Estimate went out Monday, day 5. Now Saturday counts:
SEVEN-BUSINESS-DAY WAITING PERIOD — PRECISE DEFINITION [the Linden Street file]
day 5 Mon Loan Estimate delivered <- day zero
day 6 Tue business day 1
day 7 Wed business day 2
day 8 Thu business day 3
day 9 Fri business day 4
day 10 Sat business day 5 *** SATURDAY COUNTS ***
day 11 Sun ——— not a business day ———
day 12 Mon business day 6
day 13 Tue business day 7 <- earliest permissible consummation
Under the GENERAL definition instead (offices closed Saturday), business day 7
would fall on day 14, a Wednesday. One day of difference. Closing on day 13 with
the wrong definition in your head is a violation; refusing to close on day 13
with the wrong definition in your head costs your borrower a day for nothing.
The file closed on day 51, so this rule was never in play — which is exactly why loan officers stop thinking about it and then meet it on a fifteen-day closing where it decides everything.
Count three — the three-business-day Closing Disclosure rule, precise definition. This is the one you will use on every file you ever originate. The borrower must receive the Closing Disclosure no later than three business days before consummation. On the Linden Street file the Closing Disclosure was issued and received on day 48, a Tuesday, and closing was day 51, a Friday:
THE THREE-BUSINESS-DAY CD RULE — PRECISE DEFINITION [the Linden Street file]
day 48 TUE Closing Disclosure issued AND received <- day zero; not counted
day 49 WED business day 1
day 50 THU business day 2
day 51 FRI business day 3 === CONSUMMATION
Wednesday, Thursday, Friday. Exactly three business days. No Sunday and no federal
holiday falls inside the window, so the precise and general definitions happen to
agree here — which they will not on the next file.
Receipt is day ZERO. The three days are counted AFTER receipt, and consummation may
occur ON the third one. Count the day of receipt and you will short the borrower a
day; refuse to close on the third day and you will cost yourself one.
Notice how little room there was. The Closing Disclosure could not go out before the file was clear to close on day 47, and clear to close could not happen before the payoff documentation cleared the day-44 credit problem. Three business days, exactly, and not one spare.
Notice something else, because it is the turn-time lesson of this whole file. Days 45 and 46 were a Saturday and a Sunday. The original closing date was day 45 and it simply passed, unattended, because it was a Saturday. The borrowers paid the furniture account off online on day 46, a Sunday, which is precisely how that gets done. Then Monday day 47 produced the payoff documentation, the re-run findings, and the clear to close; Tuesday day 48 produced the Closing Disclosure; and Friday day 51 was the first date the three-day rule permitted. Six calendar days of overrun from day 45 to day 51 bought the file only three business days of actual work. The weekend is not free time. It is time that costs money and produces nothing, and a loan officer who builds a schedule without looking at which days are weekends is building a schedule that will be wrong by two days.
🎓 NMLS Exam Watch
The two definitions of business day are the most reliably tested distinction in this entire subject, and the exam tests it by using Saturday.
The stem will give you a Loan Estimate delivered on a Wednesday, or a Closing Disclosure received on a Thursday, and ask for the earliest date of consummation. The answer turns on one question you must ask before you count anything: which rule am I counting?
If the question is about... Use Does Saturday count? delivering the Loan Estimate within 3 business days of application general usually no the 7-business-day wait after Loan Estimate delivery precise yes the 3-business-day receipt of the Closing Disclosure before consummation precise yes the 3-business-day mailbox presumption of receipt precise yes the right of rescission, where one exists precise yes Three traps, in the order candidates fall into them:
- Sunday is never a business day under either definition. Federal holidays are never business days under the precise definition. Saturday is the only day that moves.
- The day of delivery or receipt is day zero. You count forward from it. Consummation may occur on the third business day, not after it.
- Mailing is not receipt. If the Closing Disclosure is placed in the mail rather than handed over, the consumer is presumed to receive it three business days later — and then the three-business-day waiting period begins. A mailed Closing Disclosure therefore consumes roughly six business days, not three, unless the creditor can document actual earlier receipt. This is the single biggest practical reason lenders deliver the Closing Disclosure electronically with tracked acknowledgment.
One memory hook that survives test pressure: the precise definition is the one used for the rules that protect the borrower's time. Waiting periods and rescission are the borrower's protection, so they run on the calendar, not on your employer's hours.
🔍 Check Your Understanding
- A Closing Disclosure is hand-delivered and signed for on a Thursday. No federal holiday falls in the following week. What is the earliest date of consummation?
- Same facts, but the creditor mails the Closing Disclosure on Thursday and cannot document actual receipt. Now what is the earliest date of consummation?
- Your creditor's offices are closed Saturdays. A complete application arrives Thursday. What is the deadline to deliver the Loan Estimate, and which definition did you use?
(1: Friday 1, Saturday 2, Sunday skipped, Monday 3 — Monday. 2: presumed received the following Monday, then Tuesday 1, Wednesday 2, Thursday 3 — Thursday. 3: Friday 1, Monday 2, Tuesday 3 — Tuesday, using the general definition, because Loan Estimate delivery is the one rule on this list that does.)
22.4 The Closing Disclosure, page by page
Five pages. The first two mirror the Loan Estimate deliberately; the last three do work the Loan Estimate never had to do, because by now the numbers are real and there is a seller on the other side of the transaction.
Page 1 — the same three boxes, plus the settlement facts
Page 1 opens with three columns of identifying information that the Loan Estimate did not carry: Closing Information (date issued, closing date, disbursement date, settlement agent, file number, property, sale price), Transaction Information (borrower, seller, lender), and Loan Information (loan term, purpose, product, loan type, loan ID number, mortgage insurance case number). On the Linden Street file: date issued day 48, closing date and disbursement date day 51 — October 24 — sale price \$385,000.
Then the same three boxes as the Loan Estimate, in the same order, with the same labels: Loan Terms, Projected Payments, Costs at Closing. Loan amount \$365,750. Interest rate 6.625%. Monthly principal and interest \$2,341.94. Four NOs. Estimated total monthly payment \$3,033.72. Closing costs \$14,126.34. Cash to close \$25,376.34.
The identical layout is the point. A borrower who has the day-12 Loan Estimate open next to this can compare five numbers without reading a word of prose, and §22.8 is about making sure they do it with you rather than alone.
Page 2 — the closing costs, now with columns
Same lettered blocks A through J. What is new is that every line now has columns: Borrower-Paid, Seller-Paid, and Paid by Others, and the first two are each split into At Closing and Before Closing. That split is where the money actually is, and it is the first place to look when a borrower says a number moved.
CLOSING DISCLOSURE — PAGE 2 OF 5, CLOSING COST DETAILS [the Linden Street file]
Borrower-Paid at Closing unless noted. Seller-Paid and Paid by Others columns omitted
where zero.
LOAN COSTS
A. Origination Charges $5,486.25
0.5% of Loan Amount (Points) $1,828.75
Origination Fee $3,657.50
B. Services Borrower Did Not Shop For $827.00
Appraisal Fee $650.00
Credit Report Fee $85.00
Flood Determination Fee $14.00
Tax Service Fee $78.00
C. Services Borrower Did Shop For $2,195.00
Title - Lender's Title Insurance $1,150.00
Title - Settlement Agent Fee $595.00
Survey Fee $450.00
D. TOTAL LOAN COSTS (A + B + C) $8,508.25
OTHER COSTS
E. Taxes and Other Government Fees $212.00
Recording Fees Deed $__ Mortgage $__ $212.00
Transfer Taxes $0.00 (seller pays)
F. Prepaids $2,091.09
Homeowner's Insurance Premium (12 mo) $1,560.00
Prepaid Interest ($66.3861/day x 8 days
from 10/24 to 11/1) $531.09
Property Taxes (0 mo) $0.00
G. Initial Escrow Payment at Closing $2,315.00
Homeowner's Insurance $130.00/mo x 3 mo $390.00
Property Taxes $385.00/mo x 5 mo $1,925.00
Aggregate Adjustment $0.00 (Chapter 23)
H. Other $1,000.00
Title - Owner's Title Insurance (optional) $875.00
Pest Inspection Fee $125.00
I. TOTAL OTHER COSTS (E + F + G + H) $5,618.09
J. TOTAL CLOSING COSTS $14,126.34
Closing Costs Subtotals (D + I) $14,126.34
Lender Credits $0.00
Every column foots. A + B + C = \$8,508.25. E + F + G + H = \$5,618.09. D + I = \$14,126.34. Add that to the down payment of \$19,250.00, subtract the \$5,000 earnest money already delivered and the \$3,000 seller credit, and you have \$25,376.34 — the cash to close on page 1. If a Closing Disclosure in front of you does not foot, stop. Something is mapped wrong, and a mapping error at this stage is a tolerance problem waiting to be discovered by someone else.
Page 3 — Calculating Cash to Close, and the summaries
Page 3 does the comparison the borrower would otherwise have to do by hand. A three-column table sets the Loan Estimate figure beside the Final figure and answers Did this change? for each line, with a short explanation where the answer is yes.
| Line | Loan Estimate | Final | Did this change? |
|---|---|---|---|
| Total Closing Costs (J) | \$14,181.27 | \$14,126.34 | YES — see Total Loan Costs (D) and Total Other Costs (I) | |
| Closing Costs Paid Before Closing | \$0 | \$0 | NO | |
| Closing Costs Financed (Paid from your Loan Amount) | \$0 | \$0 | NO | |
| Down Payment / Funds from Borrower | \$19,250.00 | \$19,250.00 | NO | |
| Deposit | −\$5,000.00 | −\$5,000.00 | NO | |
| Funds for Borrower | \$0 | \$0 | NO | |
| Seller Credits | −\$3,000.00 | −\$3,000.00 | NO | |
| Adjustments and Other Credits | \$0 | \$0 | NO | |
| Cash to Close | \$25,431.27** | **\$25,376.34 | YES |
The Linden Street file shows \$0 in the "Paid Before Closing" line because this lender billed the appraisal and credit report through closing rather than collecting them when the order went out. Many lenders collect the appraisal fee by card on day 7. When they do, the same \$650 appears in the Before Closing column instead, and cash to close falls by \$650 — the total cost is identical and nothing about the tolerance analysis changes. Know which way your shop does it, because borrowers budget from this line.
Beneath the cash-to-close table, page 3 carries the Summaries of Transactions — the borrower's side and the seller's side, the closest thing on the new form to the old HUD-1. This is where the purchase price, the loan amount, the deposit, the seller credit, and the prorations of taxes and assessments between buyer and seller appear. Chapter 23 works the prorations and the disbursement.
Pages 4 and 5 — the disclosures and the calculations
Page 4 is Additional Information About This Loan: assumption, demand feature, late payment, negative amortization, partial payments, security interest, and the escrow account box, which states whether an escrow account will be established, the estimated escrowed and non-escrowed property costs over year one, the initial escrow payment, and the monthly escrow payment. Chapter 23 owns the escrow account; your job on page 4 is to be able to point at that box when a borrower asks what happens if the tax bill goes up.
Page 5 opens with Loan Calculations — five numbers, and the only place on any of these forms where the Truth in Lending vocabulary survives intact.
CLOSING DISCLOSURE — PAGE 5 OF 5, LOAN CALCULATIONS [the Linden Street file]
Issued and received day 48. Closing day 51.
Total of Payments. Total you will have paid after you make all
payments of principal, interest, mortgage insurance, and loan
costs, as scheduled. $867,317.26
Finance Charge. The dollar amount the loan will cost you. $507,662.60
Amount Financed. The loan amount available after paying your
upfront finance charge. $359,654.66
Annual Percentage Rate (APR). Your costs over the loan term
expressed as a rate. This is not your interest rate. 7.253%
Total Interest Percentage (TIP). The total amount of interest
that you will pay over the loan term as a percentage of your
loan amount. 130.512%
📄 Read the File
text FIGURE 22.2 — "Five numbers on page five" [the Linden Street file] THE DOCUMENT Closing Disclosure, page 5 of 5, Loan Calculations box. Issued and received day 48; consummation day 51. Constructed rendering; the model form is H-25 in Appendix H to Regulation Z. THE CONTEXT $365,750 at 6.625%, 30-year fixed, borrower-paid monthly mortgage insurance at a 0.58% annual factor, 0.500 discount point, prepaid finance charges of $6,095.34. Chapter 4 built every one of these figures. This chapter owns only where they sit and what they trigger. WHAT IT SHOWS The box checks itself. Amount Financed $359,654.66 plus Finance Charge $507,662.60 equals Total of Payments $867,317.26 exactly. The APR of 7.253% sits 0.628 percentage points above the 6.625% note rate on page 1, and the gap is mortgage insurance plus the $6,095.34 of charges the borrower paid up front to get the credit. TIP counts interest only — $477,348.40 of scheduled interest against a $365,750 loan, 130.512% — so it excludes the mortgage insurance and the costs that the APR includes. Two measurements of the same loan, deliberately different. WHAT IT DOESN'T It does not tell the borrower whether this is a good loan. It assumes the loan runs 360 months, which it almost certainly will not — the median mortgage does not survive to term, and every figure in this box collapses toward zero if the house is sold in seven years. It does not show the tax and insurance the borrower will actually pay for thirty years, which dwarfs several of these lines. And TIP's 130.512% is not an interest rate, a fee, or a percentage of anything the borrower pays monthly. It is $1.31 of interest per $1.00 borrowed over thirty years. THE DECISION Say the APR sentence before the borrower reads it, not after. On day 48 the call is ninety seconds: "your rate is 6.625% and did not move; the 7.253% on page five is the same loan measured a different way, and it includes your mortgage insurance." Then check the identity yourself: amount financed plus finance charge equals total of payments. If it does not, the file has a problem that is not the borrower's to discover. THE LESSON The APR is the only figure on the Closing Disclosure whose movement can force a new three-business-day waiting period. That is why you learn where it lives, what feeds it, and how far it can travel before it becomes inaccurate — and it is the whole of section 22.7.
Page 5 closes with Other Disclosures (appraisal, contract details, liability after foreclosure, refinance, tax deductions), the Contact Information table naming the lender, the mortgage broker if any, the real estate brokers, and the settlement agent with their license numbers, and the Confirm Receipt signature line — which, exactly as on the Loan Estimate, confirms receipt and not agreement.
22.5 Changed circumstances
Here is the sentence that makes this section make sense, and it is not the sentence most people carry around:
A changed circumstance is not permission to change a number. It is permission to move a baseline.
Numbers change all the time and most of them need no justification whatsoever. The homeowners insurance premium on the Linden Street file came in at \$1,560.00 against an estimate of \$1,500.00. The county reassessed the property after the sale and the escrow deposit went from \$2,270.00 to \$2,315.00. Nobody needed a changed circumstance for either, because both charges sit in the unlimited-tolerance bucket, where there is no baseline to move.
A changed circumstance matters only where a tolerance applies. It is the mechanism by which a creditor resets the figure that the eventual tolerance test measures against.
The permitted reasons
Regulation Z lists the circumstances in which a creditor may use a revised estimate for good-faith purposes. In the shape you will actually use them:
| Reason | What it means in practice |
|---|---|
| Changed circumstance affecting settlement charges | an extraordinary event beyond the control of any interested party; information the creditor relied on that turns out to be inaccurate or changes; or new information specific to the consumer or the transaction that the creditor did not rely on originally |
| Changed circumstance affecting eligibility | something that affects the borrower's creditworthiness or the value of the security — the day-44 debt discovery is the textbook case |
| Revisions requested by the consumer | the borrower asks for something that costs money: a different program, a longer lock, a buydown |
| Interest-rate-dependent charges | the rate was floating and is now locked; the creditor must issue a revised Loan Estimate reflecting the revised points and lender credits, generally within three business days of the lock |
| Expiration | the consumer did not indicate intent to proceed within ten business days of receiving the Loan Estimate, so the estimate expires |
| Delayed settlement on a construction loan | where settlement is delayed more than 60 days and the original Loan Estimate said clearly that revised disclosures may be issued |
Two constraints on all of them.
Timing. A revised Loan Estimate must generally be provided within three business days of receiving information sufficient to establish that the reason for revision applies. Not three days after you decide to act on it. Three days after you knew, which is a much earlier date and the one an examiner will reconstruct from your email.
Scope. A revised Loan Estimate resets the baseline only for the charges the reason for revision actually affected. Locking the rate on day 12 reset Section A on the Linden Street file. It did not reset the lender's title insurance, the settlement fee, the survey, or the recording fees, and a lender who treats a revised Loan Estimate as a general-purpose do-over will fail an audit.
There is one more timing constraint that matters and that used to be worse than it is. A revised Loan Estimate cannot be issued on or after the date the Closing Disclosure is provided, and the consumer must receive any revised Loan Estimate no later than four business days before consummation. Under the original rule this created a notorious gap — the "black hole" — in which a creditor could no longer issue a revised Loan Estimate but also could not use the Closing Disclosure to reset a tolerance, and therefore simply ate the cost. A 2018 amendment removed that restriction, so a creditor may now use an initial or a corrected Closing Disclosure to reset tolerances when the timing rules are met. Whether your situation qualifies is a compliance question with a real dollar answer; ask it before closing, not after.
The Linden Street file, event by event
DISCLOSURE EVENTS ON A 51-DAY FILE [the Linden Street file]
day 5 Application complete; LOAN ESTIMATE issued. [the baseline]
day 12 Rate locked 6.625% + 0.500 point. VALID changed circumstance
REVISED LOAN ESTIMATE issued. Section A resets from (interest-rate-dependent
$3,657.50 to $5,486.25. Nothing else resets. charges)
day 16 Appraisal returns at $385,000, value supported. no fee change; nothing
to disclose
day 19 Title commitment shows a prior owner's mechanic's seller's obligation to
lien on Schedule B-II. convey clear title; no
charge to the borrower;
nothing to disclose
day 30 Lien released and re-recorded; title clears. nothing to disclose
day 42 LOCK EXPIRES. 15-day extension bought at 0.250 point *** NOT A CHANGED
= $914.38, carrying the lock to day 57. CIRCUMSTANCE ***
Lender pays. See 22.6.
day 44 Credit refresh finds a $611/month debt opened day 41. affects ELIGIBILITY, not
Back-end DTI 42.66% -> 48.48%. settlement charges here
day 47 Debt paid and documented; AUS re-run; CLEAR TO CLOSE. nothing to disclose
day 48 CLOSING DISCLOSURE issued and received (Tuesday). three-day clock starts
day 51 Consummation (Friday).
Read down that column and notice how much drama produced no disclosure at all. A mechanic's lien from a prior owner is a genuine crisis in the title file and a non-event on the Loan Estimate, because it cost the borrower nothing. A borrower's back-end ratio jumping almost six points is a genuine crisis in the credit file and a non-event on the Loan Estimate for the same reason. Loan drama and disclosure events are different categories, and confusing them produces both kinds of error — re-disclosing when you should not, which resets clocks you did not need to reset, and failing to re-disclose when you must.
Now the one that costs money.
⚖️ Compliance Check
The day-42 lock extension is not a changed circumstance, and the reason is a date.
The lock taken on day 12 ran thirty days and expired on day 42. The file was not clear to close until day 47. Somebody had to buy fifteen more days, and it cost 0.250 point — \$914.38 on a \$365,750 loan.
Test it against the permitted reasons. Was it an extraordinary event beyond the control of any interested party? No. A file taking longer than its lock is ordinary, foreseeable, and within the creditor's control. Was it information the creditor relied on that turned out to be inaccurate? No — the lock term was always thirty days and everyone knew it. Was it new information specific to this consumer? Look at the calendar. The extension was purchased on day 42. The borrowers' undisclosed furniture debt was not discovered until the credit refresh on day 44. At the moment the money was spent, nothing the borrowers had done was known to anyone, and a creditor cannot justify a charge with a fact it did not have.
So the creditor has a zero-tolerance charge with no valid basis for re-disclosure. It pays.
Note what the timeline did NOT decide. If the extension had been bought on day 46 — after the credit refresh — the creditor would at least have had an argument that a borrower-caused eligibility problem drove the delay. Whether that argument supports passing a lock-extension fee to the borrower is exactly the kind of question that goes to your compliance department before the number goes on a disclosure. Documenting a changed circumstance after the fact is not documentation. It is a paper trail pointing at you.
TRID has been amended more than once since 2015 and the commentary is long. Verify current requirements with your compliance department and your regulator, and remember that state law adds its own disclosure and timing obligations on top of the federal ones.
22.6 Tolerances: zero, ten percent, unlimited — and curing a violation
A tolerance — the regulation calls it a variance — is the amount by which an actual charge at closing may exceed the charge disclosed on the Loan Estimate before the creditor has failed the good-faith standard. There are three buckets and every dollar on the form lands in exactly one of them.
The three buckets
Zero tolerance. The disclosed amount is the maximum, full stop. This bucket holds:
- charges paid to the creditor, to a mortgage broker, or to an affiliate of either — origination fees, discount points, underwriting fees, application fees, rate-lock and lock-extension fees
- charges for services the borrower was not permitted to shop for, even though a third party performs them and keeps the money — the appraisal, the credit report, the flood determination, the tax service fee
- transfer taxes
Ten percent cumulative tolerance. The aggregate of these charges may exceed the aggregate disclosed by up to ten percent. This bucket holds:
- recording fees
- charges for third-party services where the borrower was permitted to shop and selected a provider on the creditor's written list of service providers
Unlimited tolerance. No tolerance test applies at all — though the estimate must still have been made in good faith, consistent with the best information reasonably available at the time. This bucket holds:
- charges for services the borrower shopped for and obtained from a provider not on the written list
- prepaid interest
- property insurance premiums
- amounts placed into an escrow, impound, or reserve account
- charges for third-party services not required by the creditor
Now the thing that catches people. Look at the buckets and then look back at page 2 of the Closing Disclosure in §22.4. Section C — Services Borrower Did Shop For — feeds two different buckets. The lender's title insurance and the settlement agent fee on the Linden Street file came from providers on the written list, so they are ten-percent items. The survey did not: the borrowers used a surveyor their buyer's agent recommended. That is an unlimited-tolerance item sitting in the same section, on the same page, one line below.
The form does not tell you the bucket. You have to know whether the provider was on the written list, which means somebody in your shop has to have kept that list, delivered it, and documented which providers the borrower actually used. When a tolerance analysis fails an audit, this is frequently why.
EVERY DOLLAR ON THE LINDEN STREET FILE, BY BUCKET [the Linden Street file]
ZERO TOLERANCE $6,313.25
Origination fee $3,657.50 creditor's own charge
0.500 discount point $1,828.75 creditor's own charge
Appraisal fee $650.00 borrower could not shop
Credit report fee $85.00 borrower could not shop
Flood determination fee $14.00 borrower could not shop
Tax service fee $78.00 borrower could not shop
Transfer taxes $0.00 paid by seller here
TEN PERCENT CUMULATIVE $1,957.00
Recording fees $212.00 government recording
Title - Lender's Title Insurance $1,150.00 shopped, ON the written list
Title - Settlement Agent Fee $595.00 shopped, ON the written list
UNLIMITED $5,856.09
Survey fee $450.00 shopped, NOT on the list
Prepaid interest $531.09 prepaid interest
Homeowner's insurance premium $1,560.00 property insurance
Initial escrow deposit $2,315.00 escrow account
Owner's title insurance (optional) $875.00 not required by creditor
Pest inspection $125.00 not required by creditor
TOTAL $14,126.34
Three buckets, \$6,313.25 + \$1,957.00 + \$5,856.09 = \$14,126.34, which is total closing costs on page 1. If your classification does not add back to J, you have missed a charge.
Running the test
🧮 Run the Numbers
The ten-percent cumulative test on the Linden Street file, and why it is not about any one fee.
Take the three ten-percent items as disclosed on the operative Loan Estimate of day 12, and as they actually landed on the Closing Disclosure of day 48:
Charge Loan Estimate (day 12) Closing Disclosure (day 48) Change Change % Title — Lender's Title Insurance \$1,100.00 | \$1,150.00 +\$50.00 +4.55% Title — Settlement Agent Fee \$550.00 | \$595.00 +\$45.00 +8.18% Recording fees \$185.00 | \$212.00 +\$27.00 +14.59% Aggregate \$1,835.00** | **\$1,957.00 +\$122.00 +6.65% The recording fee rose 14.59%, and there is no violation. That is the whole lesson of this bucket. The test is not applied fee by fee. It is applied to the sum:
- Aggregate disclosed: \$1,835.00
- Ten percent of that: \$1,835.00 × 0.10 = **\$183.50**
- Ceiling: \$1,835.00 + \$183.50 = \$2,018.50
- Aggregate charged: \$1,957.00
- \$1,957.00 ≤ \$2,018.50 — within tolerance, with \$61.50 of room left
The increase of \$122.00 is 6.65% of \$1,835.00, comfortably inside ten percent.
Now the counterfactual, because you will meet it. Suppose the settlement agent's fee had come in at \$720.00 instead of \$595.00. The aggregate becomes \$1,150.00 + \$720.00 + \$212.00 = **\$2,082.00**. The ceiling has not moved: \$2,018.50. The violation is the excess over the ceiling:
$$\$2{,}082.00 - \$2{,}018.50 = \$63.50$$
\$63.50 is the cure — not the \$125.00 the fee went up by, and not the \$247.00 the bucket went up by. In a ten-percent bucket you refund only the amount above the ceiling. In a zero-tolerance bucket you refund the entire increase. Candidates and new loan officers get this backwards in both directions.
The zero-tolerance item on this file, and why the lender paid it
Now the \$914.38.
On day 42 the lock expired and the creditor bought a fifteen-day extension at 0.250 point. On a \$365,750 loan:
$$\$365{,}750 \times 0.00250 = \$914.375 \rightarrow \$914.38$$
A lock-extension fee is a charge by the creditor for the credit. It belongs in Section A. Section A is zero tolerance. The amount disclosed on the day-12 Loan Estimate for Section A was \$5,486.25, and there was no valid changed circumstance permitting a revision — §22.5 walked the test and it fails on a date.
So the creditor had exactly two options, and only one of them is legal:
THE $914.38 DECISION [the Linden Street file]
OPTION A — charge it.
Section A becomes $5,486.25 + $914.38 = $6,400.63 against $5,486.25 disclosed.
Cash to close becomes $25,376.34 + $914.38 = $26,290.72, three days before
closing, from borrowers who will have $12,623.66 left afterward.
ZERO-TOLERANCE VIOLATION. The creditor must refund the full $914.38 anyway,
plus deliver a corrected Closing Disclosure, within 60 calendar days of
consummation. Closing is October 24, so the deadline is DECEMBER 23.
Net result: the creditor pays $914.38, LATER, after an examination-visible
violation, having also frightened the borrower for no reason.
OPTION B — absorb it. *** WHAT ACTUALLY HAPPENED ***
The fee never reaches Section A. Nothing appears on the Closing Disclosure.
Cash to close stays at $25,376.34 exactly as disclosed.
Net result: the creditor pays $914.38, NOW, with no violation and no
correction and no conversation.
The creditor pays $914.38 either way. Only the paperwork and the exposure differ.
Say that last line to yourself once a quarter. A lender that cannot document a valid changed circumstance eats the difference. That is not a penalty; it is the structure of the rule. The tolerance is a promise, and the creditor made it.
And it is why the day-42 lock expiration is a turn-time failure rather than a pricing event. The lock was taken on day 12 for thirty days against a contract closing date of day 45. Three days of cushion on a file with eleven conditions was never enough cushion, and the \$914.38 is the price of that arithmetic. Every day costs money. This is the line item.
The mechanics of a cure
When prevention fails and a borrower has been overcharged, the cure has three parts and a deadline.
- Refund the excess to the consumer. For a zero-tolerance item, the entire amount by which the charge exceeded what was disclosed. For the ten-percent bucket, only the amount by which the aggregate exceeded the aggregate disclosed plus ten percent.
- Deliver a corrected Closing Disclosure reflecting the refund. In practice the refunded amount appears as a lender credit identified as a cure, so that the corrected form shows both the original charge and the offset. Confirm the exact presentation your compliance department requires.
- Do both no later than 60 calendar days after consummation. On the Linden Street file that would have been December 23 — sixty days after October 24.
Two practical warnings. First, a cure is not complete when the corrected form is issued; it is complete when the money reaches the borrower, and you must be able to prove it did. Second, curing does not make the violation disappear from the record. A single cured tolerance error is an administrative event. A pattern of them is a finding, and findings are what turn compliance from a process into an enforcement matter. Do not invent an expected penalty for yourself; the point is that the exposure is real, it is institutional, and it starts at your desk.
Separately from tolerance cures, Regulation Z provides for two other post-consummation corrections: non-numerical clerical errors on the Closing Disclosure, correctable within 60 calendar days after consummation; and events occurring within 30 calendar days after consummation that change an amount actually paid, which require a corrected Closing Disclosure within 30 days of the creditor receiving information about the event. Know that these exist. Verify their current terms before you rely on one.
22.7 What triggers a new three-day wait
Start with the distinction that almost everyone gets wrong, including experienced people, including real estate agents who have closed four hundred transactions.
The tolerance question compares the Loan Estimate to the Closing Disclosure. The waiting-period question compares the Closing Disclosure to itself.
A change from the Loan Estimate to the Closing Disclosure never, by itself, restarts anything. It may create a tolerance violation, which is a money problem. It does not create a timing problem, because the three-business-day clock did not start until the Closing Disclosure was delivered. The only thing that can restart that clock is a change to a Closing Disclosure the borrower has already received.
And only three changes do it.
DOES IT RESTART THE THREE-DAY CLOCK? [structure; verify current rule]
Ask three questions, in this order, about the CLOSING DISCLOSURE ALREADY DELIVERED:
1. Has the disclosed ANNUAL PERCENTAGE RATE become inaccurate? ──► NEW 3-BUSINESS-DAY
WAITING PERIOD
2. Has the LOAN PRODUCT changed? ──► NEW 3-BUSINESS-DAY
(fixed to adjustable, term, interest-only, step) WAITING PERIOD
3. Has a PREPAYMENT PENALTY been added? ──► NEW 3-BUSINESS-DAY
WAITING PERIOD
ANYTHING ELSE ──► CORRECTED CLOSING
DISCLOSURE, received
AT OR BEFORE
consummation.
NO NEW WAIT.
That is the whole list. Not "a big change." Not "anything material." Three specific things.
Question 1 — the APR. An APR is treated as accurate if it is within a stated tolerance of the APR computed from the actual terms: generally one-eighth of one percentage point above or below for a regular transaction, and one-quarter of one percentage point for an irregular transaction. Note the "or below" — an APR that drops too far is also inaccurate, which surprises people who assume the rule only protects against increases.
How far can costs move on the Linden Street file before the APR becomes inaccurate? Further than you would guess. The disclosed APR is 7.253%, and on a \$365,750 thirty-year fixed with this payment stream it takes roughly \$3,800 of additional prepaid finance charges to move the APR one-eighth of a percentage point. (Approximate, derived for this example; the sensitivity depends on loan size, term, and the payment stream.) For scale: if the \$914.38 lock-extension fee had been charged to the borrower after the Closing Disclosure went out, it would have moved the APR about three one-hundredths of a percentage point — a corrected Closing Disclosure would be required at or before consummation, and no new waiting period.
That is worth sitting with, because it inverts the intuition. A charge large enough to blow up the borrower's cash to close is usually not large enough to blow up the APR. The waiting-period trigger protects against a fundamentally different loan, not against a more expensive one.
Question 2 — the product. This is the trigger that actually fires. If the borrower switches from a 30-year fixed to a 5/6 ARM on day 50, the product line on page 1 becomes wrong and the borrower gets a new Closing Disclosure and a new three-business-day wait. Same lender, same house, same closing table, three more days. Term changes and structural features work the same way.
Question 3 — a prepayment penalty is added. Rare in the current market, absolute when it happens.
Everything else — a seller credit that grows, a recording fee that lands higher, a borrower who brings a different amount of money, a corrected spelling of a name, a settlement agent's fee that moves — requires a corrected Closing Disclosure that the borrower receives at or before consummation. Which in practice means: at the table, before signing, with the closer walking them through it.
There is also a narrow escape valve worth knowing exists and never planning around. A consumer may waive or shorten the seven-business-day and three-business-day waiting periods for a bona fide personal financial emergency — the commentary's example is the imminent sale of the consumer's home at foreclosure. The waiver must be a dated written statement describing the emergency, specifically modifying or waiving the waiting period, and signed by all consumers primarily liable. Preprinted forms are not permitted. A moving truck is not a financial emergency. Neither is a lock expiration, an inconvenient work schedule, or a seller who is annoyed. Every experienced loan officer has been asked to treat one of those as an emergency, and the answer is no.
⚠️ Where Deals Die
The Wednesday phone call that costs three days.
The Closing Disclosure went out Tuesday, day 48. Closing is Friday, day 51. On Wednesday afternoon the buyer's agent calls: the sellers have offered to buy the rate down, and could you just switch them to the 5/6 ARM instead, the payment looks so much better.
Both requests sound like favors. One of them is a three-day delay.
Adding a seller-paid buydown changes the money and requires a corrected Closing Disclosure the borrowers receive at or before consummation — annoying, doable, Friday survives. Switching the product to an adjustable-rate mortgage changes the loan product, which restarts the three-business-day clock: new Closing Disclosure Wednesday, three business days is Thursday, Friday, Saturday — and the file closes Monday at the earliest, with a lock that now needs another extension somebody pays for.
The failure mode is not that loan officers do not know the rule. It is that they answer the question in the moment, on the phone, while the agent is enthusiastic. The discipline is a sentence you say out loud before you say anything else: "Let me tell you what that does to the calendar before we talk about whether it's a good idea." Then run the three questions. Chapter 30 covers what a second lock extension costs; Chapter 19 covers why a file with no cushion cannot absorb favors.
22.8 The LE-to-CD comparison a borrower will actually make
You have now spent seven sections learning tolerance buckets, definitions of business day, and redisclosure triggers. Your borrower will use none of it.
Here is what actually happens on day 48. Two people who have never done this before open a five-page PDF on a phone, in a parking lot, between shifts. They find the Loan Estimate in their email — the first one, from day 5, because that is the one they saved. They compare four numbers, in this order:
- The interest rate.
- The monthly payment.
- The closing costs.
- The cash to close — which is the only one that determines whether they can go to closing.
Then one of them says "why is it eighteen hundred dollars more than they told us," and the phone rings.
So run the comparison first. Not because it is polite, but because the numbers are defensible and the defense takes ninety seconds if you are ready and forty minutes if you are not.
📄 Read the File
```text FIGURE 22.3 — "The comparison the borrower actually makes" [the Linden Street file] THE DOCUMENT The day-5 Loan Estimate and the day-48 Closing Disclosure, page 1 of each, side by side — which is exactly how the borrower has them. THE CONTEXT Day 48, three days before closing. The borrowers have $38,000 verified, of which $25,376.34 is about to leave. They are not auditing the tolerance buckets. They are checking whether the number they budgeted for is the number they owe. WHAT IT SHOWS LOAN ESTIMATE CLOSING day 5 (first) DISCLOSURE change Interest rate 6.750% 6.625% -0.125 Monthly P&I $2,372.25 $2,341.94 -$30.31 Est. total payment $3,053.03 $3,033.72 -$19.31 Total closing costs $12,352.52 $14,126.34 +$1,773.82 Cash to close $23,602.52 $25,376.34 +$1,773.82
The rate went DOWN. The payment went DOWN. The cash went UP $1,773.82. All three facts have one cause: on day 12 the borrowers bought 0.500 discount point for $1,828.75 to move the rate from 6.750% to 6.625%. That is +$1,828.75 of closing costs, less $54.93 that came down elsewhere, for a net +$1,773.82. The $54.93 is mostly prepaid interest: the estimate assumed 13 days and the file closed with 8.WHAT IT DOESN'T It does not show the $914.38 the lender paid on day 42, because the borrower was never charged it and it never touched a form. It does not show which of the increases were permitted and which would have been violations — the tolerance analysis is invisible on the face of both documents. And it does not show the day-12 revised Loan Estimate, which is the document that actually authorized the point. The borrower is comparing against the wrong Loan Estimate, and they are right to, because it is the one they were sent first and told to save. THE DECISION Call before they call you, on day 48, with both documents open, and open with the cause rather than the number: "The cash to close went up seventeen hundred and seventy-four dollars, and all of it is the point you bought on day twelve to get 6.625% instead of 6.750%. It saves you thirty dollars and thirty-one cents a month for as long as you keep the loan. Everything else on the form went down fifty-five dollars." Then send them the day-12 revised Loan Estimate again. THE LESSON The borrower will compare the Closing Disclosure to whichever Loan Estimate they saved, not to the one that governs. Your job is not to correct their filing. It is to know the difference between the two documents cold, so that the increase has a name and a date and a reason within one sentence of the question being asked. ```
Three habits make this conversation reliable.
Do the comparison the day the Closing Disclosure is issued, not the day of closing. You have three business days engineered into the process for exactly this purpose. That is what the waiting period is for — not to give the lender time, but to give the borrower time to read, ask, and, if necessary, walk away. Using it as buffer for your own operations is a misuse of a consumer protection.
Explain increases by cause, not by category. "Prepaid interest and escrows are estimates" is true and useless. "You bought a point, that is eighteen hundred and twenty-nine dollars, and it lowers your payment thirty dollars a month" is a sentence a person can evaluate.
Know which lines have no counterpart. The two forms are matched pairs on pages 1 and 2 and diverge afterward. The Loan Estimate's "In 5 Years" comparison box has no Closing Disclosure equivalent. The Closing Disclosure's Total of Payments, Finance Charge, and Amount Financed have no Loan Estimate equivalent. Only the APR and the Total Interest Percentage appear on both — and those are the two figures borrowers most often misread. A borrower who asks "why isn't this on the other one" is not confused; they are reading carefully, and they deserve a real answer.
22.9 Record retention and the audit trail
Everything in this chapter is enforced retroactively, by someone reading a file they did not build. That single fact should determine how you work.
An examiner, an investor's quality-control reviewer, or your own post-close audit is trying to answer a small number of questions, and each of them is answered by a document with a date on it:
WHAT THE AUDIT TRAIL MUST PROVE [structure; verify current rule]
1. WHEN did the application become complete? the six items, dated (Chapter 9)
2. WHEN was the Loan Estimate delivered or mailed? system timestamp, mail log
3. WHEN was it RECEIVED? e-consent + acknowledgment, or
the 3-business-day presumption
4. WHAT changed circumstance is each revised Loan a written reason, tied to a
Estimate relying on, and WHEN did the creditor specific charge, with the date
receive information sufficient to establish it? the creditor learned it
5. WHICH providers were on the written list, and the list as delivered, and what
which did the borrower actually use? the borrower chose
6. WHEN was the Closing Disclosure delivered, and timestamp, tracked delivery,
when was it received? signed receipt
7. Was any tolerance exceeded, and if so, WHEN was the refund, the corrected CD,
it cured and did the money actually arrive? and proof of delivery
Item 4 is the one that fails. Everything else is generated by a system. A changed
circumstance is generated by a human being writing down why.
Regulation Z sets the retention periods, and they are not all the same number, which is the reason people get them wrong:
| Record | Retention period | Source |
|---|---|---|
| Evidence of compliance with the Loan Estimate and Closing Disclosure requirements | 3 years after consummation | Reg Z §1026.25(c)(1)(i) |
| The Closing Disclosure and all documents related to it | 5 years after consummation | Reg Z §1026.25(c)(1)(ii) |
| General Regulation Z records | 2 years | Reg Z §1026.25(a) |
| Loan originator compensation records | 3 years after the date of payment | Reg Z §1026.25(c)(2) |
| Credit application records under ECOA | 25 months | Reg B §1002.12(b) |
The five-year Closing Disclosure period travels with the loan: if the creditor sells or transfers the loan before five years have run, the new owner is responsible for retaining the Closing Disclosure for the remainder of the period, and the creditor must provide a copy. Records may be kept electronically so long as they accurately reproduce the disclosures.
Layered on top of Regulation Z are Regulation X, the Home Mortgage Disclosure Act's own record requirements, your investor's requirements — which are frequently longer than the regulation's — and state law, which varies enormously. Nobody in production should be deciding retention periods from memory. Know that they differ, know that five years is the longest of the federal ones you will meet on a purchase file, and get the operative list from your compliance department.
The practical version of all of this, for a loan officer, is four sentences long. Write down the reason at the moment you learn it. Put the reason in the loan origination system, not in your email, and tie it to the specific charge it justifies. Never re-disclose without a documented reason, and never document a reason after you re-disclose. If you cannot write one sentence naming what changed, when you learned it, and which charge it affects, you do not have a changed circumstance — you have a fee your employer is about to pay for.
22.10 The TRID calendar, drawn
Here is the whole file on one grid, day 0 through day 51, with the disclosure events marked. Day 0 is a Wednesday; the calendar is pinned to it, and every day on which a human must act falls on a business day.
THE LINDEN STREET FILE — 51 DAYS [the Linden Street file]
Day 0 is a Wednesday. Weekends shaded with ~~. Closing is October 24.
SUN MON TUE WED THU FRI SAT
┌─ 0 ─┐ 1 2 ~3~ agent's call; credit
│Sep 3│ pre- pulled; pre-approval
└─────┘ appr issued day 1
~4~ 5 6 7 8 9 ~10~
contract APP+ AUS orders LE DELIVERED day 5.
executed LOAN LE deadline was day 8.
ESTIMATE 7-day wait ends day 13.
~11~ 12 13 14 15 16 ~17~
LOCK ^ appraisal REVISED LE day 12
6.625% earliest $385,000 (rate-dependent
+0.500 consumm- charges reset)
30-day ation
~18~ 19 20 21 22 23 ~24~
title submitted
commit- to under-
ment writing
~25~ 26 27 28 29 30 ~31~
COND'L lien
APPROVAL cleared
11 conds
~32~ 33 34 35 36 37 ~38~
$4,900
deposit
sourced
~39~ 40 41 42 43 44 ~45~
furniture LOCK credit ORIGINAL
financed EXPIRES refresh CLOSING
(unknown) +15 days DTI DATE —
$914.38 48.48% MISSED
LENDER PAYS (a Saturday)
~46~ 47 48 49 50 51
furniture CLEAR CLOSING ─── 3 business days ───►
paid off TO DISCLOSURE 1 2 3
(Sunday) CLOSE received CONSUMMATION day 51
(Tuesday) Friday, October 24
Two things this picture teaches that a list of dates does not.
The disclosure events cluster at the ends. Days 5 and 12 at the front; days 48 and 51 at the back. Between day 12 and day 48 — thirty-six days, more than two-thirds of the file — TRID asks almost nothing of you, which is precisely why it is easy to stop thinking about it and then get surprised.
The last row is the whole chapter. Look at how days 45 and 46 sit: a Saturday and a Sunday straddling the original closing date. The file blew its closing date on a day when nobody was working, the borrowers solved their own crisis on a Sunday, and the entire recovery — payoff documentation, re-run findings, clear to close, Closing Disclosure, three-day wait, funding — was compressed into the five days that were left. Six calendar days of overrun bought three business days of work.
Now the generic version, which is the one to carry in your head:
THE TRID CLOCK — GENERIC [structure; verify current rule]
APPLICATION COMPLETE (the six items)
│
│ ≤ 3 business days [GENERAL definition]
▼
LOAN ESTIMATE delivered or placed in the mail
│
│ if not delivered in person: presumed RECEIVED 3 business days later
│ [PRECISE definition]
│
│ ≥ 7 business days from delivery to consummation [PRECISE definition]
│
│ ... changed circumstances -> REVISED LOAN ESTIMATE within 3 business days
│ of receiving sufficient information; resets the baseline ONLY for the
│ charges affected; not on or after the CD date, and received no later
│ than 4 business days before consummation
▼
CLOSING DISCLOSURE delivered
│
│ if not delivered in person: presumed RECEIVED 3 business days later
│ [PRECISE definition]
│
│ ≥ 3 business days from RECEIPT to consummation [PRECISE definition]
│
│ APR inaccurate / product change / prepayment penalty added
│ -> NEW 3-business-day waiting period
│ anything else -> corrected CD received at or before consummation
▼
CONSUMMATION
│
│ tolerance cure: refund + corrected CD within 60 calendar days
▼
RETENTION: 5 years for the Closing Disclosure; 3 years for evidence of compliance
🗂️ The Loan File
Chapter 22 contribution: the Loan Estimate to Closing Disclosure comparison, line by line, with every change classified and the cure identified.
This is the tolerance analysis a post-close reviewer will perform on this file. Do it yourself, on day 48, before anyone else does.
The baseline is the revised Loan Estimate of day 12 for the rate-dependent charges in Section A, and the original Loan Estimate of day 5 for everything else — and on this file the two documents are identical outside Section A, which is what makes the table readable.
| # | Charge | LE baseline | Final CD | Change | Bucket | Verdict |
|---|---|---|---|---|---|---|
| 1 | Origination fee | \$3,657.50 | \$3,657.50 | \$0.00 | zero | OK | |
| 2 | 0.500 discount point | \$1,828.75 | \$1,828.75 | \$0.00 | zero | OK — reset by the day-12 lock | |
| 3 | Appraisal fee | \$650.00 | \$650.00 | \$0.00 | zero | OK | |
| 4 | Credit report fee | \$85.00 | \$85.00 | \$0.00 | zero | OK | |
| 5 | Flood determination | \$14.00 | \$14.00 | \$0.00 | zero | OK | |
| 6 | Tax service fee | \$78.00 | \$78.00 | \$0.00 | zero | OK | |
| 7 | Transfer taxes | \$0.00 | \$0.00 | \$0.00 | zero | OK — seller pays | |
| 8 | Lock extension fee | — | \$0.00** | **\$0.00 to borrower | zero | CURED — lender absorbed \$914.38 | |
| 9 | Lender's title insurance | \$1,100.00 | \$1,150.00 | +\$50.00 | 10% | see aggregate | |
| 10 | Settlement agent fee | \$550.00 | \$595.00 | +\$45.00 | 10% | see aggregate | |
| 11 | Recording fees | \$185.00 | \$212.00 | +\$27.00 | 10% | see aggregate | |
| — | 10% bucket aggregate | \$1,835.00** | **\$1,957.00 | +\$122.00 (6.65%)** | **ceiling \$2,018.50 | WITHIN — \$61.50 of room | ||
| 12 | Survey fee | \$400.00 | \$450.00 | +\$50.00 | unlimited | OK — off-list provider | |
| 13 | Prepaid interest | \$863.02 | \$531.09 | −\$331.93 | unlimited | OK — 13 days est., 8 actual | |
| 14 | Homeowner's insurance, 12 mo | \$1,500.00 | \$1,560.00 | +\$60.00 | unlimited | OK — property insurance | |
| 15 | Initial escrow deposit | \$2,270.00 | \$2,315.00 | +\$45.00 | unlimited | OK — reassessed taxes | |
| 16 | Owner's title insurance | \$875.00 | \$875.00 | \$0.00 | unlimited | OK — optional | |
| 17 | Pest inspection | \$125.00 | \$125.00 | \$0.00 | unlimited | OK | |
| Total closing costs (J) | \$14,181.27** | **\$14,126.34 | −\$54.93 | ||||
| Cash to close | \$25,431.27** | **\$25,376.34 | −\$54.93 |
Check the arithmetic on the change column: +50 +45 +50 +27 +60 +45 − 331.93 = −\$54.93. It foots.
What this settles. Every dollar of the \$14,126.34 is classified, the ten-percent bucket passes with \$61.50 of room, no borrower refund is owed, and the one zero-tolerance exposure on the file — the \$914.38 lock extension — was absorbed by the lender before it ever reached a form. Cash to close is \$25,376.34, exactly as disclosed, and the borrowers keep \$7,423.66 in reserves after the furniture payoff. The Closing Disclosure was received Tuesday day 48; Wednesday, Thursday, Friday is three business days; consummation on day 51 is compliant.
What it does not settle. Nothing here proves the estimates were made in good faith at the time they were made — a tolerance test is arithmetic, and good faith is also a question about what the creditor reasonably knew on day 5. Nothing here documents why the lock was only thirty days against a forty-one-day contract, which is the decision that cost \$914.38 and which no form records. And the borrowers still do not know their lender paid it, which is a choice about the relationship, not about compliance.
Open questions carried forward:
- Q22.1. What actually happens between the signed Closing Disclosure and recorded ownership — who disburses, in what order, and when does the loan legally exist? (Chapter 23)
- Q22.2. The escrow account seeded with \$2,315.00 at closing: how is that figure limited, and what is the aggregate adjustment on page 2 for? (Chapter 23)
- Q22.3. RESPA Section 8 governs who may pay whom for a referral in this transaction, and TILA reaches well beyond these two forms. (Chapter 24)
Your task. In Appendix C's workbook, build the tolerance table for this file from the Closing Disclosure in §22.4 without looking at the table above: list all seventeen charges, assign each to a bucket, and run the ten-percent aggregate test. Then answer one question in a sentence: if the lender had charged the \$914.38 to the borrower, what would the creditor have owed, to whom, and by what date?
Conclusion
TRID replaced four forms with two, and the two are built to be compared. The Loan Estimate says what the creditor believes the loan will be; the Closing Disclosure says what it is. Between them sits a system of tolerances that converts certain estimates into promises, and a system of waiting periods that converts the borrower's right to read into a hard date on your calendar.
The three things to carry out of this chapter:
The two definitions of business day are not interchangeable, and Saturday is where they differ. Loan Estimate delivery runs on the general definition — the days your creditor's offices are open. The seven-business-day waiting period, the three-business-day Closing Disclosure receipt rule, the mailbox presumptions, and rescission all run on the precise definition, where every calendar day except Sunday and eleven federal holidays counts. On the Linden Street file the Closing Disclosure was received Tuesday, day 48; Wednesday, Thursday, and Friday are three business days; and day 51 was the first date the file could legally close.
A tolerance is a promise, and a lender who cannot document a changed circumstance keeps it. The lock extension bought on day 42 cost 0.250 point — \$914.38 — and it was purchased two days before anyone knew the borrowers had financed furniture. No valid changed circumstance existed at the moment the money was spent, an origination charge is a zero-tolerance item, and so the creditor paid. The borrower's cash to close never moved off \$25,376.34.
Only three changes restart the clock. The APR becoming inaccurate, the loan product changing, or a prepayment penalty being added. Everything else — every cost, every credit, every correction — is a corrected Closing Disclosure received at or before consummation. Learn the three, and you will stop being the loan officer who accidentally promises a Friday closing on a Wednesday product change.
Compliance is not paperwork. On this file it was \$914.38, three business days, and the difference between a family getting keys on the twenty-fourth and getting an explanation.
Next: the Closing Disclosure is delivered and the waiting period has run. Chapter 23 takes the file through the closing table itself — who signs what, who disburses in what order, how the escrow account seeded with \$2,315.00 actually works, what the aggregate adjustment on page 2 is doing, and when this loan legally comes into existence.
Key Terms
TRID (TILA-RESPA Integrated Disclosure rule) — the rule that combined the Truth in Lending and RESPA mortgage disclosures into the Loan Estimate and the Closing Disclosure, effective October 3, 2015. (Ch.22)
Know Before You Owe — the Consumer Financial Protection Bureau project, launched in 2011, that designed and consumer-tested the integrated forms. (Ch.22)
Loan Estimate (LE) — the three-page form disclosing estimated terms and costs, delivered or mailed within three business days of a completed application. (Ch.22)
Closing Disclosure (CD) — the five-page form disclosing the actual terms and costs, which the consumer must receive at least three business days before consummation. (Ch.22)
Business day (general definition) — a day on which the creditor's offices are open to the public for carrying on substantially all of its business functions; governs delivery of the Loan Estimate. (Ch.22)
Business day (precise definition) — all calendar days except Sundays and the federal legal public holidays specified in 5 U.S.C. 6103(a); governs the seven-business-day waiting period, the three-business-day Closing Disclosure receipt rule, the mailbox presumptions, and rescission. Saturday counts. (Ch.22)
Three-business-day rule — two distinct rules sharing a number: the Loan Estimate must be delivered or mailed within three business days of application, and the Closing Disclosure must be received at least three business days before consummation. (Ch.22)
Waiting period — the interval a creditor must let elapse before consummation: seven business days after Loan Estimate delivery, and three business days after Closing Disclosure receipt. (Ch.22)
Changed circumstance — one of the enumerated reasons permitting a creditor to issue a revised Loan Estimate and reset the tolerance baseline for the charges the reason affects. (Ch.22)
Tolerance (variance) — the amount by which an actual charge may exceed the disclosed charge before the creditor has failed the good-faith standard. (Ch.22)
Zero tolerance — the bucket in which the disclosed amount is the maximum: the creditor's own charges including origination and points, charges for services the borrower could not shop for, and transfer taxes. (Ch.22)
Ten percent cumulative tolerance — the bucket in which the aggregate of the charges may exceed the aggregate disclosed by up to ten percent: recording fees, and services the borrower could shop for but obtained from a provider on the creditor's written list. (Ch.22)
Unlimited tolerance — the bucket with no numeric test: services shopped for off the written list, prepaid interest, property insurance premiums, and escrow deposits. (Ch.22)
Tolerance cure — the creditor's refund of the excess plus a corrected Closing Disclosure, delivered no later than 60 calendar days after consummation. (Ch.22)
Total of Payments — the Loan Calculations line on Closing Disclosure page 5 stating the total the consumer will have paid after all scheduled payments; on this file \$867,317.26, equal to Amount Financed plus Finance Charge. Arithmetic in Chapter 4. (Ch.22)
Total Interest Percentage (TIP) — the line on Loan Estimate page 3 and Closing Disclosure page 5 expressing total scheduled interest as a percentage of the loan amount; 130.512% on this file. Arithmetic in Chapter 4. (Ch.22)
APR redisclosure trigger — the rule that a Closing Disclosure whose disclosed annual percentage rate has become inaccurate requires a corrected disclosure and a new three-business-day waiting period. (Ch.22)
Spaced Review
-
(Ch. 9 + Ch. 22) On the Linden Street file the day-1 pre-approval named no subject property. Explain, in two sentences, why that fact means the Loan Estimate clock did not start until day 5, and name the item that was missing.
-
(Ch. 22) A Closing Disclosure is placed in the mail on a Friday and the creditor has no evidence of earlier receipt. No federal holiday falls in the following two weeks. Give the earliest permissible date of consummation, and show every day you counted.
-
(Ch. 21 + Ch. 22) The borrowers bought owner's title insurance for \$875. Say which section of the Closing Disclosure it appears in, which tolerance bucket it falls in, and why the answer to the second question follows from Chapter 21's account of whom that policy protects.
-
(Ch. 22) A lender's title insurance premium was disclosed at \$1,100 and lands at \$1,290 at closing, with the settlement fee and recording fees unchanged at \$550 and \$185. The borrower selected the title company from the creditor's written list. Is there a violation, and if so, what exactly does the creditor owe?
-
(Ch. 9 + Ch. 21 + Ch. 22) Two days before closing, the title company discovers a second recording requirement that adds \$40 to the recording fees, and the seller agrees to increase their credit by \$500. Does either change restart the three-business-day waiting period? What document, if any, must the borrower receive, and by when?