Determine the difference in APR between the initial LE and the CD. Explain whether the difference is more or less than the APR accuracy tolerance limit under TRID.
Understand the Problem
The question is asking us to compare the APR between the initial Loan Estimate (LE) and the Closing Disclosure (CD) to see if the difference is within the tolerated limit under the TILA-RESPA Integrated Disclosure (TRID) regulations. We need to calculate the difference in APR and then check its significance against the APR accuracy tolerance limit set by TRID.
Answer
The APR difference should not exceed 0.125% for regular loans or 0.25% for irregular loans under TRID.
The difference in APR between the initial Loan Estimate (LE) and the Closing Disclosure (CD) should not exceed the accuracy tolerance limit established under TRID, which is generally 0.125% for regular transactions and 0.25% for irregular transactions.
Answer for screen readers
The difference in APR between the initial Loan Estimate (LE) and the Closing Disclosure (CD) should not exceed the accuracy tolerance limit established under TRID, which is generally 0.125% for regular transactions and 0.25% for irregular transactions.
More Information
The TILA-RESPA Integrated Disclosure (TRID) rule establishes tolerance thresholds to protect consumers from unexpected changes in their loan costs. Changes beyond these thresholds may require a new loan estimate.
Tips
A common mistake is overlooking the type of transaction (regular or irregular) when determining the applicable tolerance level.
Sources
- TILA-RESPA Integrated Disclosure FAQs - consumerfinance.gov
- Change in APR, LE or CD? - Bankers Online - bankersonline.com
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