The $300 Appraisal Increase and a Monday Closing
You originate for a brokerage in the District. A first-time buyer has a ratified contract on a legal two-unit property financed FHA: $420,000 price, 3.5% down, consummation set for Monday, March 17. Your Loan Estimate was delivered in person on Monday, March 3. It showed your $1,150 origination fee, a $45 credit report fee, a $650 appraisal fee, and $1,995 in title services from a company on your written provider list. You gave the borrower the list at application and she chose not to shop. On Friday, March 7, the appraisal management company emails that the property is a legal two-unit, so the fee is $950 rather than $650. Nothing else about the loan changes. At 4:10 p.m. on Tuesday, March 11, you email a revised Loan Estimate showing the $950 appraisal fee; the borrower opens it that evening and replies "got it." No federal holiday falls in this period. The seller refuses any extension, and the title company needs final figures by Friday, March 14.
1. Is the appraisal increase a valid basis for a revised Loan Estimate, and how do the four fees in this file group into TRID tolerance categories?
Read the worked answer
Yes, this is a classic valid changed circumstance. The property turned out to be a two-unit, a fact you did not know and could not reasonably have known when the March 3 estimate was issued, and it raised the cost of a required settlement service. You may issue a revised estimate within three business days of receiving the information (by March 12), so the March 11 timing is fine on that step. But a revised estimate only resets good-faith tolerances for the item affected.
Grouping:
- Zero tolerance: your $1,150 origination fee (paid to the broker) and the $45 credit report fee (the borrower is not permitted to shop for it). These cannot increase at all without a valid changed circumstance tied to that specific fee.
- 10% cumulative bucket: the $650 appraisal and the $1,995 title services, because the borrower received a written provider list and did not shop.
The trap is assuming the appraisal increase alone is safe because a changed circumstance exists. Even a properly reset estimate does not excuse a different fee's overage, and here the appraisal increase must also be measured against the aggregate bucket rather than in isolation.
2. Did the emailed revised Loan Estimate satisfy the receipt rule? Walk the day count and state the borrower's real options.
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No. Two separate clocks apply.
First, the receipt clock. A revised estimate must be received by the borrower no later than four business days before consummation. Business days here are all calendar days except Sundays and federal holidays, so Saturdays count. Because you emailed rather than hand-delivered, the borrower is deemed to receive it three business days after you sent it.
- Sent Tuesday, March 11.
- Deemed received: Wednesday 12 (1), Thursday 13 (2), Friday 14 (3) - received Friday, March 14.
- Four business days must then run before closing: Saturday 15 (1), Sunday excluded, Monday 17 (2), Tuesday 18 (3), Wednesday 19 (4).
So closing could not occur before Thursday, March 20. To close March 17, the borrower would have needed actual receipt by Tuesday, March 11 - the day you sent it. Your processor's "six days before closing" reasoning counts calendar days and ignores both the mailbox rule and the four-day receipt requirement.
The real options are: (1) move consummation to March 20 or later, sourcing the delay honestly to the seller; or (2) close March 17 and treat the original estimate as controlling, curing the tolerance violation. Hand-delivering today does not help, because delivery still only takes effect today and the four-day gap still pushes closing to March 20.
3. If the loan closes March 17 as scheduled, what exactly is owed to the borrower, and how must it be delivered?
Read the worked answer
Because the revised estimate was not received in time, it cannot be used to reset the good-faith baseline. The March 3 estimate governs.
Zero-tolerance items are unchanged, so no cure there. For the 10% bucket:
- Original estimates: $650 appraisal + $1,995 title = $2,645.
- Permitted ceiling: $2,645 + 10% ($264.50) = $2,909.50.
- Actual charges: $950 + $1,995 = $2,945.
- Overage owed to the borrower: $35.50.
This is where candidates lose points. The instinct is to refund the full $300 appraisal increase, but the 10% bucket is aggregate, not item-by-item - if title had come in $100 under estimate, the file would show no violation at all. Conversely, the $35.50 is real and must be paid.
The refund must be delivered no later than 60 days after consummation, together with a written explanation, and reflected in a corrected Closing Disclosure. Note also that had the corrected estimate arrived on time, the $2,945 would simply have become the new baseline and no refund would be due - the entire liability here flows from the delivery method, not the changed circumstance.