13. Can My Settlement Charges Change?

by Local Title

During the real estate transaction process, borrowers may wonder if settlement charges can change. While initial estimates provide an overview of expected costs, various circumstances may lead to adjustments in settlement charges. Here’s what borrowers need to know about the potential for changes in settlement charges:

Changed Circumstances

Settlement charges may change if certain circumstances arise, including:

a) Natural Disasters: If a natural disaster damages the property or affects closing costs, resulting in unexpected expenses.

b) Title Insurer Issues: In the event that the title insurer providing the estimate goes out of business during underwriting, alternative arrangements may impact settlement charges.

c) New Information: Discovery of new information regarding the borrower or transaction that affects settlement, such as additional fees or expenses.

Revisions to Loan Estimates

If any of these events occur and result in changes to third-party charges beyond the 10% tolerance limit, creditors may issue a revised Loan Estimate. This revised estimate reflects the updated settlement charges based on the changed circumstances, ensuring borrowers are informed of any adjustments to their financial obligations.

Presumption of Collected Information

It’s important to note that when a creditor issues a Loan Estimate, they are presumed to have collected all six pieces of required information from the borrower. Therefore, creditors cannot claim a change in circumstances by receiving one of these pieces of information after issuing the Loan Estimate. This provision ensures that creditors provide accurate estimates based on the information available at the time of issuance.

Transparency and Accountability

By allowing for revisions to Loan Estimates in response to changed circumstances, TRID regulations promote transparency and accountability in real estate transactions. Borrowers are protected against unforeseen changes in settlement charges, ensuring they have access to updated cost estimates throughout the loan process.

Effective Communication

Clear communication between borrowers and creditors is essential in navigating potential changes in settlement charges. Borrowers should promptly inform creditors of any significant events or discoveries that may impact settlement costs. Likewise, creditors should communicate any revisions to Loan Estimates promptly and clearly to ensure borrowers are fully informed.

In conclusion, while initial estimates provide a baseline for settlement charges, various circumstances may lead to changes in costs throughout the real estate transaction process. By understanding the conditions under which settlement charges may change and maintaining open communication with creditors, borrowers can navigate potential adjustments confidently and make informed decisions about their real estate transactions.