Between the Loan Estimate and closing, prepaid interest increases $180, homeowner insurance increases $95, transfer taxes increase $40, and a credit report fee for which the consumer could not shop increases $12. There is no valid revised estimate or other exception. Which increases violate TRID's zero-tolerance rule?
Correct Answer
D) Both the $40 transfer-tax and $12 credit-report increases
Transfer taxes and fees for required third-party services the consumer may not shop for are generally subject to zero tolerance. Both increases therefore require a cure on the stated facts. Prepaid interest and homeowner insurance fall in categories without a numerical tolerance ceiling, although their original estimates must still be made in good faith. The prior explanation incorrectly placed transfer taxes in the unlimited-tolerance category. Source: 12 CFR 1026.19(e)(3)(i)–(iii); Official interpretation 19(e)(3)(i)-1
Why This Is the Correct Answer
Transfer taxes and fees for required third-party services the consumer may not shop for are generally subject to zero tolerance. Both increases therefore require a cure on the stated facts. Prepaid interest and homeowner insurance fall in categories without a numerical tolerance ceiling, although their original estimates must still be made in good faith. The prior explanation incorrectly placed transfer taxes in the unlimited-tolerance category. Source: 12 CFR 1026.19(e)(3)(i)–(iii); Official interpretation 19(e)(3)(i)-1
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