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I am running up against one item in Integrated Disclosures that I am struggling to work through and could use some guidance.
Initially, when a creditor completes a Loan Estimate they determine which services the borrower can shop for and those they can’t. Those services the borrower can shop for allows them to be disclosed in Block C under Loan Costs on Page 2 of the LE; in turn the borrower should receive a “shopping list” from the creditor to be able to select a service provider off of the list if they choose to do so. By categorizing these fees in Block B, the creditor is provided a 10% tolerance requirement since allowing the borrower to shop for these services.
If the borrower chooses a servicer directly from the “shopping list”, the regulation states that the fee should then be moved to Block B under Loan Costs on page 2 of the Closing Disclosure – Services Borrower Did Not Shop For because the borrower didn’t technically “shop”. How does this impact tolerance? Is the creditor still subject to the 10% tolerance even though the fee “switched blocks” from the Loan Estimate to the Closing Disclosure? or is there no tolerance?
Any guidance is appreciated! I believe I have looked at it too long! Thanks.
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