On a $300,000 loan, the Loan Estimate shows $1,200 in origination charges. At closing, the actual origination charges are $1,150. The lender also charged an unexpected $100 application fee not disclosed on the LE. What is the tolerance violation amount?
Correct Answer
C) $100 - the full amount of the undisclosed application fee
Zero tolerance fees cannot increase at all from the Loan Estimate. While the origination charge decreased by $50, the undisclosed $100 application fee represents a $100 tolerance violation. Decreases in some zero tolerance fees do not offset increases in others for tolerance calculation purposes.
Why This Is the Correct Answer
Zero tolerance fees cannot increase at all from the Loan Estimate. While the origination charge decreased by $50, the undisclosed $100 application fee represents a $100 tolerance violation. Decreases in some zero tolerance fees do not offset increases in others for tolerance calculation purposes.
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Previous Question
A self-employed borrower's Schedule C shows gross receipts of $150,000 but net profit of only $25,000 due to high business expenses including meals, travel, and home office deductions. For mortgage purposes:
Next Question
A Loan Estimate shows $0 for recording fees because the lender was unsure of the exact amount. At closing, the actual recording fees are $125. The lender argues this isn't a tolerance violation since $0 was disclosed in good faith. Which statement is correct?