Which of the following items on the Loan Estimate has no tolerance level?

Which of the following items on the Loan Estimate has no tolerance level?

• A. Title insurance fees
• B. Recording fees
• C. Transfer taxes
• D. Origination fees

Answer: (A)

The correct answer is title insurance fees because these fees are considered to be subject to a tolerance level of 0% under the TILA-RESPA Integrated Disclosure Rule. This means that lenders must provide borrowers with the exact cost of title insurance, and there is no tolerance allowed; the fee cannot change from the Loan Estimate to the Closing Disclosure. In contrast, the other options have specific tolerance levels. For example, recording fees and transfer taxes generally fall under the "0% tolerance" category as well, meaning the fees can only change if the borrower requests a change in the loan. Origination fees, on the other hand, have a 10% tolerance, allowing them to increase within that limit between the Loan Estimate and Closing Disclosure. Understanding the distinction between these categories is essential for mortgage professionals as they prepare loan documentation and disclose fees accurately to borrowers.

The correct answer is title insurance fees because these fees are considered to be subject to a tolerance level of 0% under the TILA-RESPA Integrated Disclosure Rule. This means that lenders must provide borrowers with the exact cost of title insurance, and there is no tolerance allowed; the fee cannot change from the Loan Estimate to the Closing Disclosure.

In contrast, the other options have specific tolerance levels. For example, recording fees and transfer taxes generally fall under the "0% tolerance" category as well, meaning the fees can only change if the borrower requests a change in the loan. Origination fees, on the other hand, have a 10% tolerance, allowing them to increase within that limit between the Loan Estimate and Closing Disclosure.

Understanding the distinction between these categories is essential for mortgage professionals as they prepare loan documentation and disclose fees accurately to borrowers.