Determine the difference in APR between the initial Loan Estimate and the Closing Disclosure. Explain whether the difference is more or less than the APR accuracy tolerance limit u... Determine the difference in APR between the initial Loan Estimate and the Closing Disclosure. Explain whether the difference is more or less than the APR accuracy tolerance limit under TRID.
Understand the Problem
The question is asking to compare the APR (Annual Percentage Rate) between two documents - the initial Loan Estimate and the Closing Disclosure. It also requires an explanation of whether the difference falls within the APR accuracy tolerance limit established under TRID (TILA-RESPA Integrated Disclosure). This involves understanding the regulations and calculating the differences between the two APR figures.
Answer
The APR difference should not exceed 0.125% for regular transactions under TRID.
Under the TRID regulations, the APR difference between the Loan Estimate and the Closing Disclosure should not exceed 0.125% (1/8th of 1%) for regular transactions and 0.25% for irregular transactions to comply with the accuracy tolerance limit.
Answer for screen readers
Under the TRID regulations, the APR difference between the Loan Estimate and the Closing Disclosure should not exceed 0.125% (1/8th of 1%) for regular transactions and 0.25% for irregular transactions to comply with the accuracy tolerance limit.
More Information
The TRID regulations integrate RESPA and TILA disclosures and aim to provide clarity and accuracy throughout the mortgage process. Ensuring the APR is within specified limits protects consumers by preventing significant fluctuations in loan costs after initial disclosures.
Tips
A common mistake is not accounting for the type of transaction which affects the permissible APR tolerance limit.
Sources
- Refresher on triggering events impacting the revised loan estimate - wolterskluwer.com
- TILA-RESPA Integrated Disclosure FAQs - consumerfinance.gov
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