The Rural Appraisal Revision and the Two Fees That Grew at the Table
On Thursday, June 2, Dana takes a complete application from a first-time buyer purchasing a $340,000 primary residence in Springfield. The loan is a 30-year conventional fixed at 80% LTV ($272,000), with consummation scheduled for Thursday, July 14. Her Loan Estimate shows: appraisal $875 (lender-selected AMC; the borrower cannot shop), credit report $95, title services and lender's title insurance $1,450 (borrower may shop, and she picked a provider from the lender's written list), recording fees $140, and transfer taxes $1,190.
On June 20 the AMC emails that the property is a 45-minute rural drive from the nearest panel appraiser, so the fee will be $1,025. Dana issues a revised Loan Estimate on June 23. At the closing table the settlement agent charges $1,790 for title and $175 for recording, explaining only that these are "current market rates." No changed circumstance was documented for either increase. The Closing Disclosure was hand-delivered to the buyer on Saturday, July 9.
1. Sort each fee into its Regulation Z tolerance category and determine whether this loan has a tolerance violation. Show the arithmetic and state the cure.
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Zero-tolerance bucket (cannot increase): appraisal ($875 to $1,025), credit report ($95), transfer taxes ($1,190).
10% cumulative bucket: title services/lender's title insurance ($1,450) plus recording fees ($140) - recording is always in this bucket, and title lands here because the borrower shopped and chose a provider from the lender's written list. Baseline = $1,450 + $140 = $1,590. Maximum permitted total = $1,590 x 1.10 = $1,749, i.e., $159 of aggregate increase allowed.
Actual: $1,790 + $175 = $1,965. Increase = $375. Excess over the 10% cap = $375 - $159 = $216.
Conclusion: there is a $216 tolerance violation in the 10% bucket that must be cured - refund to the borrower and a corrected Closing Disclosure delivered no later than 60 days after consummation (by September 12).
The appraisal: it sits in the zero-tolerance bucket, so the $150 increase survives only if the rural drive time is a genuine changed circumstance (unexpected, beyond the parties' control, and discovered after the LE) and a revised LE was delivered within 3 business days of learning of it. If either element fails, the $150 is a second violation and must be cured too.
2. Was the June 23 revised Loan Estimate effective to reset the appraisal fee? What would change if it had been issued July 6 instead?
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Timing is measured in business days (all calendar days except Sundays and federal holidays) from when the creditor receives information sufficient to establish the changed circumstance. Information arrived Monday, June 20; the revised LE went out Thursday, June 23 - three business days, timely. Substantively, a rural-drive-time discovery after the application is the classic unexpected, third-party-driven event, so the reset is valid, subject to two conditions: the revised LE must be delivered no later than four business days before consummation, and it cannot be delivered on or after the Closing Disclosure.
Had the revised LE gone out July 6, it would fail on both counts. It is far outside the 3-business-day window, and July 6 is inside the four-business-day pre-consummation cutoff for a July 14 closing. An untimely revised LE does not reset the tolerance, so the $150 appraisal increase becomes a zero-tolerance violation that the creditor must absorb and refund within 60 days.
Practical rule: the reset depends on the date the LE was delivered or placed in the mail, not the date it was generated or dated.
3. Is the Saturday, July 9 Closing Disclosure delivery timely for a July 14 consummation? What if consummation slips to Friday, July 15, with no other changes?
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For Closing Disclosure purposes, a business day is every calendar day except Sundays and federal holidays - Saturdays count. The consumer must receive the CD at least three business days before consummation.
Count forward from hand delivery on Saturday, July 9: Sunday, July 10 is excluded; Monday, July 11 = day 1; Tuesday, July 12 = day 2; Wednesday, July 13 = day 3; Thursday, July 14 is consummation and is not counted. That is exactly three business days, so the delivery is timely.
If closing moves to Friday, July 15, delivery on July 9 gives four business days (July 11, 12, 13, 14), so no new waiting period is triggered merely by the date change. But watch the trap: a date change almost always alters per-diem interest, which requires a revised CD. A revised CD does not automatically restart the three-day wait - a new wait is required only if the APR becomes inaccurate beyond the 1/8 of 1 percent tolerance, the loan product changes, a prepayment penalty is added, or the change otherwise falls into a category requiring a new three-business-day review. Also confirm the buyer didn't receive the CD by mail, which would add three days to the presumed receipt date.