How long does a lender have to cure a tolerance violation?

A tolerance violation refers to the situation where the actual settlement costs exceed the tolerances set forth in the Closing Disclosure or Good Faith Estimate. Under the regulations established by the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA), lenders have a specific timeframe in which they must address any such violations to ensure compliance and protect consumers.

The correct answer indicates that a lender has 60 calendar days after settlement to cure a tolerance violation. This allows sufficient time for both the lender and the borrower to reconcile any discrepancies related to closing costs, ensuring that the borrower is not penalized for charges that exceed the estimated amounts provided at the beginning of the lending process.

Understanding this timeframe is crucial for lenders, as it helps them maintain compliance with federal regulations and fosters trust with borrowers by ensuring transparency and accountability regarding closing costs. Addressing violations within this period is fundamental for legal and regulatory adherence in the mortgage industry.