A borrower's Loan Estimate shows total closing costs of $8,000. At closing, the actual total closing costs are $8,650. Assuming no changed circumstances occurred, what is the maximum tolerance violation?
Correct Answer
C) $450
The 10% cumulative tolerance applies to most third-party services and other closing costs. 10% of $8,000 is $800, so the maximum allowed increase is $800. The actual increase is $650, which is within tolerance. However, if this exceeded $800, the violation would be the amount over $800.
Why This Is the Correct Answer
The 10% cumulative tolerance applies to most third-party services and other closing costs. 10% of $8,000 is $800, so the maximum allowed increase is $800. The actual increase is $650, which is within tolerance. However, if this exceeded $800, the violation would be the amount over $800.
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