The file reviewer is resolving TILA Tolerance Violations during an internal audit sample. Which action best fits the rule?
Correct Answer
C) Compare charges between the Loan Estimate and Closing Disclosure
Why this is correct: Under TRID (TILA-RESPA Integrated Disclosure) rules, resolving tolerance violations requires a precise comparison of the charges on the Loan Estimate (LE) and the final Closing Disclosure (CD). This comparison identifies which fees exceeded their allowed tolerance thresholds (zero, 10%, or unlimited) and determines if a cure (refund to borrower) is required. Why the other choices are wrong: "Cure a tolerance problem by renaming the fee instead of documenting or refunding the variance" is wrong because renaming a fee does not cure a violation; the actual dollar variance must be refunded to the borrower if required. "Move the fee to a different category to avoid a tolerance cure" is wrong because fee categorization is based on the nature of the service, not to evade tolerance rules; mis-categorizing fees is a violation. "Increase a zero-tolerance charge because the borrower accepted the cost verbally" is wrong because zero-tolerance charges (like the lender's own fees) cannot increase at all, regardless of borrower acceptance; any increase requires a refund. Exam tip: The foundational step for any tolerance audit is a line-by-line comparison of the LE and CD. Know the three tolerance categories: zero (cannot increase), 10% (can increase up to 10% in aggregate), and unlimited.
Why This Is the Correct Answer
The correct response is "Compare charges between the Loan Estimate and Closing Disclosure" because TRID fee disclosures and tolerance categories govern estimates, revisions, and closing-cost comparison.
Why the Other Options Are Wrong
Option A: Cure a tolerance problem by renaming the fee instead of documenting or refunding the variance.
This choice is a tempting shortcut, but it conflicts with fee disclosure and tolerance treatment because the file still needs the required documentation, timing, or rule-based review before the action is taken.
Option B: Move the fee to a different category to avoid a tolerance cure.
This choice is not the best answer because it applies the wrong file step for fee disclosure and tolerance treatment; the governing rule is tested by the correct option.
Option D: Increase a zero-tolerance charge because the borrower accepted the cost verbally.
This choice is a tempting shortcut, but it conflicts with fee disclosure and tolerance treatment because the file still needs the required documentation, timing, or rule-based review before the action is taken.
Memory Technique
TILA Tolerance Violations: identify the rule being tested, then choose the action that documents or applies that rule before the file moves forward.
Exam Tip
For fee disclosure and tolerance treatment questions, separate the required file step from plausible sales, timing, or documentation shortcuts.
Common Mistakes to Avoid
- -Choosing an internal exception instead of the governing rule
- -Treating preliminary or informal facts as a substitute for required documentation
- -Answering from a familiar but unrelated mortgage topic
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