IBA Compliance Connection

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If the US Department of Agriculture (USDA) loan guarantee fee for a consumer mortgage decreased by one penny after we issued our Loan Estimate, do we need to issue a revised Loan Estimate to reflect that change? We do not know why there is now a one-cent difference, but we believe it was a software rounding issue. There are no other changes to the closing fees and costs.

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No, the TILA-RESPA Integrated Disclosure (TRID) rules do not require you to issue a revised Loan Estimate simply due to a one-cent decrease in a USDA loan guarantee fee. Regulation Z permits creditors to issue revised Loan Estimates only in certain situations such as when changed circumstances result in increased charges. In this case, you have indicated that none of the charges set forth in the Loan Estimate have increased.

We also note that we do not think that a one-cent decrease in a closing charge would violate the good faith requirement regarding closing disclosures under Regulation Z. The rule requires that charges paid by or imposed on the consumer must not exceed the amounts originally disclosed. In this case, the charges for the consumer are less than what was originally disclosed.

For resources related to our guidance, please see:

  • Regulation Z, 12 CFR 1026.19(e)(3)(iv) (Listing six events that justify issuing a revised Loan Estimate for the purpose of determining good faith, including changed circumstances that cause an increase to settlement charges)
  • CFPB TILA-RESPA Integrated Disclosure, Small Entity Compliance Guide, pg 23 (“Creditors generally may not issue revisions to Loan Estimates because they later discover technical errors, miscalculations, or underestimations of charges. Creditors are permitted to issue revised Loan Estimates only in certain situations such as when changed circumstances result in increased charges.”)
  • Regulation Z, Official Interpretations, 12 CFR 1026, Paragraph 19(e)(3)(iv), Comment 2 (“The revised disclosures may reflect increased charges only to the extent that the reason for revision, as identified in § 1026.19(e)(3)(iv)(A) through (F), actually increased the particular charge.  . . .”)  (emphasis added)
  • Regulation Z, 12 CFR 1026.19(e)(3)(i) (“An estimated closing cost disclosed pursuant to paragraph (e) of this section is in good faith if the charge paid by or imposed on the consumer does not exceed the amount originally disclosed under paragraph (e)(1)(i) of this section, except as otherwise provided in paragraphs (e)(3)(ii) through (iv) of this section.”) (emphasis added)