The Loan Estimate (LE) is a mandatory 3-page federal disclosure governed by the TILA-RESPA Integrated Disclosure (TRID) Rule enforced by the Consumer Financial Protection Bureau (CFPB). By federal law, a mortgage lender MUST deliver an official Loan Estimate within 3 business days of receiving a borrower's six application pieces (Name, Income, Social Security Number, Property Address, Estimated Property Value, and Desired Loan Amount).
To protect consumers from "bait-and-switch" fee inflation between application and closing, the Loan Estimate locks lender and third-party fees into three strict Federal Fee Tolerance Buckets: 1. Zero Tolerance (0% Increase Allowed): Lender origination fees, underwriting/processing fees, discount points (once locked), appraisal fees, and transfer taxes can NEVER increase above the Loan Estimate without a valid documented "Changed Circumstance". 2. 10% Cumulative Tolerance: Recording fees and third-party settlement services where the borrower selects a provider from the lender’s written list cannot increase by more than 10% in aggregate. 3. Unlimited Tolerance (Market Rate): Prepaid daily interest, homeowner’s insurance premiums, initial escrow deposits, and third-party services where the borrower shops independently off-list.