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name: cd-tolerance-reference language: en description: Guides the agent through TRID tolerance compliance under 12 CFR § 1026.19(e)(3), comparing Closing Disclosure fees to Loan Estimate fees across zero, 10% cumulative, and unlimited tolerance categories. Use when reviewing a CD for tolerance variances, determining whether a revised LE is permitted, calculating cure amounts, or resolving post-closing tolerance violations. tags:

• analysis
• policy
• regulatory
• transactional

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TRID CD Tolerance Reference

Determines whether CD fees comply with TRID tolerance limits set by the most recent valid LE, and calculates any required cure.

Prerequisites

• Most recent valid LE (original or revised) with line-item fees
• Final CD with line-item fees
• Lender's written list of service providers (classifies shopped services)
• Documentation of any changed circumstances supporting a revised LE

Tolerance Categories

Authority: 12 CFR § 1026.19(e)(3). Always compare CD fees to the most recent valid LE.

Category	Rule	Measurement
Zero	Cannot increase at all	Per item
10% Cumulative	CD category total ≤ LE total × 110%	Aggregate
Unlimited	May change freely (good faith at LE required)	None

Zero Tolerance (0%)

Any increase from LE to CD is a violation requiring cure.

Category	Examples
Creditor/broker fees	Origination, application, underwriting, processing, discount points, commitment, rate lock
Affiliate fees	Any fee to entity affiliated with creditor/broker
Transfer taxes	State/local transfer taxes, mansion tax, documentary stamps
Services borrower cannot shop	Appraisal (creditor-selected), credit report, flood determination, tax monitoring

Compliant: every item variance ≤ $0. Any positive variance = cure amount.

10% Cumulative Tolerance

Measured as category aggregate, not per item.

Category	Examples
Recording fees	Deed recording, mortgage recording, other recording
Shopped services from lender's list	Title policies, title search, settlement/closing fee, notary, survey, pest inspection, settlement attorney

If borrower chose a provider not on lender's written list, that fee moves to unlimited tolerance.

Cure calculation:

• Maximum permitted = LE total × 110%
• Excess = CD total − maximum permitted (if positive)

Unlimited Tolerance

No cure required. Includes:

• Prepaid interest, insurance premiums (homeowner's, flood, hazard)
• Initial escrow deposits (taxes, insurance, MIP, aggregate adjustment)
• Property costs not required by creditor (prepaid taxes, HOA)
• Services where borrower chose provider off lender's list
• Optional services (home warranty, optional owner's title, non-required inspections)

Changed Circumstances

A valid changed circumstance permits a revised LE that resets tolerances for affected fees only. Per 12 CFR § 1026.19(e)(3)(iv):

• Deliver revised LE within 3 business days of learning of the change
• At least 4 business days before consummation

Type	Examples
Extraordinary event	Natural disaster, war, civil unrest
Information inaccuracy	Income/assets differ; property differs from disclosed
Previously unavailable info	Title defect, survey encroachment
Borrower-requested change	Different product, property, or added borrower
Rate lock	Borrower locks after floating
LE expiration	Closing delayed beyond 10 business days after LE

Invalid reasons: creditor error, market fluctuation, processing delays, simple underestimates, bad-faith original estimate.

Cure Requirements

Authority: 12 CFR § 1026.19(f)(2)(v). All within 60 calendar days after consummation:

1. Refund excess amount to borrower
2. Provide corrected CD reflecting the cure
3. Document cure in loan file

Category	Maximum Permitted	Cure
Zero tolerance	= LE amount	CD − LE (if positive)
10% cumulative	= LE total × 110%	CD total − max permitted (if positive)

Pitfalls

Mistake	Correction
Testing 10% items individually	Measure as cumulative category total
Applying 10% to affiliate fees	Affiliate fees are zero tolerance
Changed circumstance increasing unrelated fees	Only revise affected fees
Revised LE > 3 business days after learning of change	Must issue within 3 business days
Comparing net fees after credits	Compare gross fees; credits don't affect tolerance
Missing 60-day cure deadline	Calendar from consummation date

Key Rules

• Seller credits don't affect tolerance — always compare gross fees
• Specific lender credits tied to a fee reduce it for tolerance; general credits do not
• Construction loans: tolerances apply separately per phase
• Subordinate financing: each loan has independent tolerances; no fee-shifting between loans
• Always verify affiliate status — misclassification as 10% item is a common exam finding

References

• 12 CFR § 1026.19(e)(3) — Tolerance categories
• 12 CFR § 1026.19(e)(3)(iv) — Changed circumstances
• 12 CFR § 1026.19(f)(2)(v) — Cure requirements
• CFPB Official Interpretation, Comments 19(e)(3)(i)-1 through -6
• CFPB Official Interpretation, Comments 19(e)(3)(iv)-1 through -6
• CFPB TRID Small Entity Compliance Guide, Section 7