TRID: Understanding Unlimited Tolerances

When it comes to TRID, an estimated closing cost is generally considered to be “in good faith” if the actual amount paid by the consumer does not exceed the amount that was disclosed on the Loan Estimate. There is a little wiggle room, however, for certain fees, as long as any increases stay within certain tolerance thresholds. Thus, there are 0% tolerance fees, 10% tolerance fees and unlimited tolerance fees.

Today we’re going to talk about unlimited tolerance fees. While “unlimited” makes it sound like estimating the amounts for these types of fees is a bit of a free-for-all, it’s really not. While there is quite a bit more grace given for things like property insurance, you can’t just make wild, unfounded guesses as to what those actual amounts will be. Any estimate for an unlimited tolerance item must still be disclosed in good faith.

Jerod explains more in the video.

Video Highlights:

• "Unlimited Tolerance" may seem like anything goes but, in actuality, the “good faith standard” still applies.
• Fees in the unlimited tolerance category include things like odd-days interest, property insurance, and escrow deposits.
• If unlimited tolerance fees are not in good faith, they can become subject to a 0% tolerance.

Published
2024/03/08