8.3 TRID Integrated Disclosures: Loan Estimate, Closing Disclosure & Fee Tolerances

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1. Scope & The Six-Piece Application Trigger

A. Covered Transactions

TRID applies to most closed-end consumer credit transactions secured by real property or a cooperative unit. It covers purchase loans, refinances, 25-acre vacant land loans, and construction loans.

Exempt Transactions (§1026.19(e)(1)(i)):

• Open-end credit plans (HELOCs governed by §1026.40);
• Reverse mortgages (governed by traditional RESPA/TILA disclosures);
• Chattel-dwelling loans (mortgages secured by manufactured homes or mobile homes not affixed to real property);
• Commercial, agricultural, or business purpose credit.

B. The Six Application Pieces (ALIENS)

Under 12 CFR §1026.2(a)(3), an "application" is legally deemed to exist the moment the creditor receives the following six pieces of information from a consumer:

1. Address of the subject property;
2. Loan amount sought;
3. Income of the consumer;
4. Estimate of property value;
5. Name of the consumer; and
6. Social Security number (to obtain a credit report).

Strict Pre-Disclosure Prohibitions

Once all six pieces are received, the creditor cannot:

• Require the consumer to submit verifying documentation (such as W-2s, paystubs, or bank statements) as a condition of issuing the Loan Estimate;
• Charge any fee to the consumer—including application fees, processing fees, or appraisal fees—prior to delivering the LE and receiving the consumer's affirmative intent to proceed;
• Sole Exception: The creditor may charge a bona fide and reasonable fee strictly to cover the actual cost of obtaining a credit report.

2. Loan Estimate Delivery & Good-Faith Fee Tolerances (§1026.19(e))

A. Delivery Clocks & Business Day Definitions

• The 3-Business-Day Rule: The creditor must deliver or place in the mail the Loan Estimate within 3 business days after receiving the six application items.
  • Definition: Here, "business day" uses the general definition (any calendar day on which the creditor's offices are open to the public for carrying on substantially all business functions).
• The 7-Business-Day Waiting Period: The creditor cannot consummate the loan until at least 7 business days have elapsed after the LE is delivered or placed in the mail.
  • Definition: Here, "business day" uses the specific definition (all calendar days except Sundays and 11 legal federal holidays).

B. Good-Faith Fee Tolerance Categories (§1026.19(e)(3))

Creditors are held strictly accountable for fee estimates disclosed on the LE. Fees are segregated into three distinct tolerance tiers:

The Written List of Service Providers (SSPL, §1026.19(e)(1)(vi))

For any settlement service where the creditor permits the consumer to shop (e.g., title search, pest inspection), the creditor must deliver a Written List of Settlement Service Providers on a separate sheet of paper within 3 business days of application. The list must identify at least one available provider for each service and state that the consumer may choose a different provider.

• If the consumer selects a provider from the list → 10% cumulative tolerance applies.
• If the consumer chooses a provider not on the list → Unlimited tolerance applies.
• Failure to supply the written list is a separate violation. If shopping was actually permitted, the commentary generally treats the charge under the 10% cumulative category; if shopping was not permitted, zero tolerance applies.

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3. Revised Loan Estimates & Changed Circumstances (§1026.19(e)(3)(iv))

The six Section 1026.19(e)(3)(iv) grounds are: changed circumstances affecting settlement charges; changed circumstances affecting eligibility; consumer-requested revisions; interest-rate-dependent charges when the rate is locked; expiration after more than ten business days without an indication of intent to proceed; and the specifically disclosed delayed-settlement rule for qualifying new construction. Each has conditions. Document the actual ground and revise only affected charges; a changed circumstance does not reset the entire estimate.

Timing for Revised LE

The creditor must deliver or place in the mail the revised LE within 3 business days of receiving information sufficient to establish the changed circumstance. Once the Closing Disclosure has been issued, a revised LE can no longer be provided; changed circumstances must be reflected on a revised CD.

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4. Closing Disclosure Delivery & Redisclosure Triggers (§1026.19(f))

A. The 3-Day Receipt Rule

The consumer must receive the Closing Disclosure at least 3 specific business days prior to consummation.

• Electronic/In-Person Delivery: If delivered in person, the 3-day clock begins immediately upon confirmed receipt.
• Mailbox Rule Presumption: If the CD is mailed or transmitted electronically without confirmed earlier receipt, the consumer is presumed to receive it 3 specific business days after mailing/transmission. Consequently, closing cannot occur until at least 6 specific business days after mailing (3 days mailing + 3 days waiting).

B. The Three Specific Triggers Requiring a NEW 3-Day Waiting Period

Most last-minute closing adjustments (e.g., seller credits, minor walkthrough escrows) do not restart the 3-day waiting period; the creditor simply provides a corrected CD at or before closing. Under 12 CFR §1026.19(f)(2)(ii), exactly three events require an updated CD and reset the 3-specific-business-day waiting period:

1. The Disclosed APR Becomes Inaccurate: The disclosed APR becomes inaccurate under § 1026.22, including its applicable mortgage finance-charge tolerances; a decrease caused by an overstated finance charge does not automatically restart the clock;
2. The Loan Product Changes: The loan program changes (e.g., a 30-year fixed rate changes to an adjustable-rate mortgage or a loan with a balloon payment);
3. A Prepayment Penalty Is Added: A prepayment penalty feature is introduced into the loan agreement.

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5. Post-Consummation Adjustments & Tolerance Cures (§1026.19(f)(2))

If post-closing audits reveal errors or tolerance breaches on the Closing Disclosure, Regulation Z provides specific remedy windows:

• Tolerance Cures (60-Day Window): If the consumer paid amounts at closing exceeding allowable 0% or 10% tolerance thresholds, the creditor must cure the violation by refunding the excess dollar amount to the consumer and placing a corrected CD in the mail within 60 calendar days of consummation.
• Non-Numeric Clerical Errors (60-Day Window): If an inaccuracy involves a non-numeric clerical error (e.g., misspelled name or incorrect recording reference), the creditor must deliver a corrected CD no later than 60 calendar days after consummation.
• Post-Closing Escrow Adjustments: If settlement charges change within 30 days post-consummation (e.g., actual recording fee paid to the county is less than disclosed), a corrected CD reflecting the change must be delivered within 30 calendar days of receiving notice of the change.

Revised estimate receipt and current disclosure baseline

A revised Loan Estimate used to reset tolerances generally must be received no later than four specific business days before consummation, and cannot be issued on or after the date the Closing Disclosure is provided. Mailbox presumptions can require earlier mailing. A valid changed circumstance resets only the affected charges; it does not authorize unrelated increases or cure an initial bad estimate. The six grounds in § 1026.19(e)(3)(iv) include changed circumstances affecting costs, changed circumstances affecting eligibility, consumer requests, a later rate lock, expired estimates, and delayed settlement on qualifying construction loans. The first three examples of cost-related changed circumstances are not three separate regulatory reset grounds. For a changed cost affecting the CD that occurs within 30 days after consummation, provide correction within 30 days of receiving information sufficient to establish the change; do not confuse this with the 60-day clerical-error and tolerance-refund provisions.