The rounding rules for the Loan Estimate and the Closing Disclosure are found in 12 CFR § 1026.37(o)(4) and 12 CFR § 1026.38(t)(4), respectively. The Official Interpretation to § 1026.38(t)(4)-2 states:
“For guidance regarding the requirements of § 1026.38(t)(4) [Closing Disclosure], see the commentary to § 1026.37(o)(4) [Loan Estimate].”
The Official Interpretation to § 1026.37(o)(4)-1 directs:
“. . . except as otherwise provided in § 1026.37(o)(4) [Rounding for the Loan Estimate], any amount required to be disclosed by § 1026.37 [Loan Estimate] is not permitted to be rounded and is disclosed using decimal places where applicable, unless otherwise provided.”
Combining these two citations, we can reasonably conclude that:
- where guidance is absent for the Closing Disclosure in § 1026.38(t)(4), the guidance to be used is found in the Rounding section of the Loan Estimate in § 1026.37(o)(4); and
- unless it is specifically provided for in §§ 1026.37(o)(4) and 1026.38(t)(4), rounding is not permitted on the LE and CD.
§§ 1026.37(o)(4) and 1026.38(t)(4) list the specific instances where rounded and unrounded amounts are required for dollar amounts and percentages.
LE Dollar Amounts That Are Rounded
1026.37(o)(4)(i)(A) states:
“The dollar amounts required to be disclosed by paragraphs (b)(6) and (7), (c)(1)(iii), (c)(2)(ii) and (iii), (c)(4)(ii), (f), (g), (h), (i), and (l) of this section shall be rounded to the nearest whole dollar . . .”
1026.37(o)(4)(i)(C) states:
“The dollar amounts required to be disclosed by paragraph (c)(2)(iv) of this section shall be rounded to the nearest whole dollar, if any of the component amounts are required by paragraph (o)(4)(i)(A) of this section to be rounded to the nearest whole dollar.”
The following are the specific dollar amounts that are required to be rounded in the Loan Estimate:
- Adjustments After Consummation [Can this amount increase after closing?] (b)(6)
- Adjustment in Loan Amount (b)(6)(i)
- Adjustment in Interest Rate (b)(6)(ii)
- Increase in Periodic Payment [Monthly Principal and Interest] (b)(6)(iii)
- Details About Prepayment Penalty and Balloon Payment [Does the loan have these features?] (b)(7)
- Maximum Amount of the Prepayment Penalty (b)(7)(i)
- Maximum amount of the Balloon Payment (b)(7)(ii)
- Projected Payments
- When a Range of Payments is Disclosed for Principal and Interest (c)(1)(iii)
- Mortgage Insurance Premiums (c)(2)(ii)
- Estimated Escrow (c)(2)(iii)
- Estimated Total Monthly Payment only if Mortgage Insurance Premiums and/or Estimated Escrow are component amounts of the Estimated Total Monthly Payment (c)(2)(iv)
- Sum of Estimated Taxes, Insurance and Assessments (c)(4)(ii)
- Closing Cost Details – Loan Costs (f)
- Origination Charges [Section A] (f)(1)
- Services You Cannot Shop For [Section B] (f)(2)
- Services You Can Shop For [Section C] (f)(3)
- Total Loan Costs [Section D] (f)(4)
- Closing Cost Details – Other Costs (g)
- Taxes and Other Government Fees [Section E] (g)(1)
- Prepaids – Homeowner’s Insurance Premium [Section F] (g)(2)(i)
- Prepaids – Mortgage Insurance Premium [Section F] (g)(2)(ii)
- Prepaids – Property Taxes [Section F] (g)(2)(iv)
- Other [Section H] (g)(4)
- Total Other Costs [Section I] (g)(5)
- Total Closing Costs [Section J] (g)(6)
- Calculating Cash to Close (h)(1)
- Total Closing Costs [Section J] (h)(1)(i)
- Closing Costs Financed (Paid from your Loan Amount) (h)(1)(ii)
- Down Payment/Funds from Borrower (h)(1)(iii)
- Deposit (h)(1)(iv)
- Funds for Borrower (h)(1)(v)
- Seller Credits (h)(1)(vi)
- Adjustments and Other Credits (h)(1)(vii)
- Estimated Cash to Close (h)(1)(viii)
- Calculating Cash to Close – Alternative Table (h)(2)
- Loan Amount (h)(2)(i)
- Total Closing Costs [Section J] (h)(2)(ii)
- Estimated Total Payoffs and Payments (h)(2)(iii)
- Estimated Cash to or from Consumer (h)(2)(iv)
- Estimated Closing Costs Financed (Paid from your Loan Amount) (h)(2)(v)
- Adjustable Payment (AP) Table (i)
- Interest Only Payments? (i)(1)
- Optional Payments? (i)(2)
- Step Payments? (i)(3)
- Seasonal Payments? (i)(4)
- Monthly Principal and Interest Payments (i)(5)
- Comparisons (l)
- In 5 Years (l)(1)
- Annual Percentage Rate (APR) (l)(2)
- Total Interest Percentage (TIP) (l)(3)
CD Dollar Amounts That Are Rounded
1026.38(t)(4)(i) states:
“The following dollar amounts are required to be rounded to the nearest whole dollar:
-
- The dollar amounts required to be disclosed by paragraph (b) of this section that are required to be rounded by § 1026.37(o)(4)(i)(A) when disclosed under § 1026.37(b)(6) and (7);
- The dollar amounts required to be disclosed by paragraph (c) of this section that are required to be rounded by § 1026.37(o)(4)(i)(A) when disclosed under § 1026.37(c)(1)(iii);
- The dollar amounts required to be disclosed by paragraphs (e) and (i) of this section under the subheading “Loan Estimate”;
- The dollar amounts required to be disclosed by paragraph (m) of this section; and
- The dollar amounts required to be disclosed by paragraph (c) of this section that are required to be rounded by § 1026.37(o)(4)(i)(C) when disclosed under § 1026.37(c)(2)(iv).”
The following are the specific dollar amounts that are required to be rounded in the Closing Disclosure:
- Loan Terms (b) – Adjustments After Consummation [Can this amount increase after closing?] § 1026.37(b)(6)
- Adjustment in Loan Amount § 1026.37(b)(6)(i)
- Adjustment in Interest Rate § 1026.37(b)(6)(ii)
- Increase in Periodic Payment [Monthly Principal and Interest] § 1026.37(b)(6)(iii)
- Loan Terms (b) – Details About Prepayment Penalty and Balloon Payment [Does the loan have these features?] § 1026.37(b)(7)
- Maximum Amount of the Prepayment Penalty § 1026.37(b)(7)(i)
- Maximum amount of the Balloon Payment § 1026.37(b)(7)(ii)
- Projected Payments (c)
- When a Range of Payments is Disclosed for Principal and Interest § 1026.37(c)(1)(iii)
- Calculating Cash to Close – Alternative Table (e)
- Loan Amount (Loan Estimate Section) (e)(1)(i)
- Total Closing Costs (Loan Estimate Section) [Section J] (e)(2)(i)
- Closing Costs Paid Before Closing (Loan Estimate Section) (e)(3)(i)
- Total Payoffs and Payments (Loan Estimate Section) [Section K] (e)(4)(i)
- Calculating Cash to Close (i)
- Total Closing Costs (Loan Estimate Section) [Section J] (i)(1)(i)
- Closing Costs Paid Before Closing (Loan Estimate Section) (i)(2)(i)
- Closing Costs Financed (Paid from your Loan Amount) (Loan Estimate Section) (i)(3)(i)
- Down Payment/Funds from Borrower (Loan Estimate Section) (i)(4)(i)
- Deposit (Loan Estimate Section) (i)(5)(i)
- Funds for Borrower (Loan Estimate Section) (i)(6)(i)
- Seller Credits (Loan Estimate Section) (i)(7)(i)
- Adjustments and Other Credits (Loan Estimate Section) (i)(8)(i)
- Cash to Close (Loan Estimate Section) (i)(9)(i)
- Adjustable Payment (AP) Table (m)
- Interest Only Payments? 1026.37(i)(1)
- Optional Payments? 1026.37(i)(2)
- Step Payments? 1026.37(i)(3)
- Seasonal Payments? 1026.37(i)(4)
- Monthly Principal and Interest Payments 1026.37(i)(5)
LE Dollar Amounts That Are Unrounded
1026.37(o)(4)(i)(A) states:
“The dollar amounts required to be disclosed by paragraphs (b)(6) and (7), (c)(1)(iii), (c)(2)(ii) and (iii), (c)(4)(ii), (f), (g), (h), (i), and (l) of this section shall be rounded to the nearest whole dollar, except that the per diem amount required to be disclosed by paragraph (g)(2)(iii) of this section and the monthly amounts required to be disclosed by paragraphs (g)(3)(i) through (iii) and (g)(3)(v) of this section shall not be rounded.”
1026.37(o)(4)(i)(B) states:
“The dollar amount required to be disclosed by paragraph (b)(1) of this section shall not be rounded, and if the amount is a whole number then the amount disclosed shall be truncated at the decimal point.”
The following are the specific dollar amounts that are required to be unrounded in the Loan Estimate:
- Loan Amount (unless it is a whole number, then the amount is truncated at the decimal point) (b)(1)
- Prepaids
- Per Diem (g)(2)(iii)
- Initial Escrow Payment at Closing [Section G]
- Homeowner’s Insurance (only monthly amount) (g)(3)(i)
- Mortgage Insurance (only monthly amount) (g)(3)(ii)
- Property Taxes (only monthly amount) (g)(3)(iii)
- Maximum of Five Additional Escrow Items (only monthly amount) (g)(3)(v)
CD Dollar Amounts That Are Unrounded
Basically, every amount in the Closing Disclosure is unrounded unless it is specifically identified in the regulation as rounded.
Official Interpretation to § 1026.38(t)(4)-1 states:
“Consistent with § 1026.2(b)(4), any amount required to be disclosed by § 1026.38 and not required to be rounded by § 1026.38(t)(4) must be disclosed as an exact numerical amount using decimal places where applicable, unless otherwise provided. For example, under § 1026.38(t)(4), the principal and interest payment disclosed under § 1026.37(b)(3) and § 1026.38(b) must be disclosed using decimal places even if the amount of cents is zero, in contrast to the loan amount disclosed under § 1026.37(b)(1) and § 1026.38(b).”
1026.38(t)(4)(iii) states:
“Loan amount. The dollar amount required to be disclosed by paragraph (b) of this section as required by § 1026.37(b)(1) shall be disclosed as an unrounded number, except that if the amount is a whole number then the amount disclosed shall be truncated at the decimal point.”
The Dollar Amount Rounding Rules
1) Generally, when dollar amounts are rounded, they follow the mathematic rule of rounding down if the amount is 49 cents or less, and rounding up if the amount is 50 cents or more. When the amount is rounded, the whole number amount is truncated at the decimal point. An example is given in the Official Interpretation to § 1026.37(o)(4)(i)(A)-1:
“ROUNDING OF DOLLAR AMOUNTS. Section 1026.37(o)(4)(i)(A) requires that certain dollar amounts be rounded to the nearest whole dollar. For example, pursuant to § 1026.37(o)(4)(i)(A), periodic mortgage insurance payments of $164.50 are required to be disclosed under § 1026.37(c)(2)(ii) as $165. However, if the periodic mortgage insurance payment equaled $164.49, the creditor would disclose $164.”
2) Anytime a component of a calculation includes a rounded amount, the total calculation must be rounded as well. The following are two examples:
Official Interpretation to § 1026.37(o)(4)(i)(C)-1:
“ROUNDING OF THE TOTAL MONTHLY PAYMENT. Section 1026.37(o)(4)(i)(C) requires the total monthly payment amount disclosed under § 1026.37(c)(2)(iv) to be rounded if any of its components are rounded. For example, if the total monthly payment disclosed under § 1026.37(c)(2)(iv) is composed of a $2,000.49 periodic principal and interest payment required to be disclosed by § 1026.37(c)(2)(i) and a $164.49 periodic mortgage insurance payment required to be disclosed by § 1026.37(c)(2)(ii), the creditor would calculate the total monthly payment by adding the exact periodic principal and interest payment of $2,000.49 and the rounded periodic mortgage insurance payment of $164, round the total, and disclose $2,164.”
Official Interpretation to § 1026.37(o)(4)-2:
“CALCULATIONS. If a dollar amount that is required to be rounded by § 1026.37(o)(4)(i) on the Loan Estimate is a total of one or more dollar amounts that are not required or permitted to be rounded, the total amount must be rounded consistent with § 1026.37(o)(4)(i), but such component amounts used in the calculation must use such unrounded numbers. In addition, if any such unrounded component amount is required to be disclosed under § 1026.37, consistent with § 1026.2(b)(4), it should be disclosed as an unrounded number. If an amount that is required to be rounded by § 1026.37(o)(4)(i) on the Loan Estimate is a total of one or more components that are also required to be rounded by § 1026.37(o)(4)(i), the total amount must be calculated using such rounded amounts. For example, the subtotals required to be disclosed by § 1026.37(f)(1), (2), and (3) are calculated using the rounded amounts disclosed under those subsections. See also comment 37(o)(4)(i)(C)-1. However, the amounts required to be disclosed by § 1026.37(l) reference actual amounts for their components, rather than other amounts disclosed under § 1026.37 and rounded pursuant to § 1026.37(o)(4)(i), and thus, they are calculated using unrounded numbers.”
Aggregate Amounts
The following citations specifically identify instances where aggregate amounts may be used:
1026.37(f)(6) states:
“(i) If the creditor is not able to itemize every service and every corresponding charge required to be disclosed in the number of lines provided by paragraph (f)(1)(ii) or (f)(2)(ii) of this section, the remaining charges shall be disclosed as an aggregate amount in the last line permitted under paragraph (f)(1)(ii) or (f)(2)(ii), as applicable, labeled “Additional Charges.”
(ii)(B) Disclose the remaining charges as an aggregate amount in the last line permitted under paragraph (f)(3)(ii), labeled “Additional Charges.””
Official Interpretation to §1026.37(g)(1)-2 states:
“OTHER GOVERNMENT CHARGES. Any charges or fees imposed by a State or local government that are not transfer taxes are aggregated with recording fees and disclosed under § 1026.37(g)(1)(i).”
1026.37(g)(8) states:
“USE OF ADDENDA. An addendum to a form of disclosures prescribed by this section may not be used for items required to be disclosed by this paragraph (g). If the creditor is not able to itemize all of the charges described in this paragraph (g) in the number of lines provided by paragraphs (g)(2)(vi), (3)(v), or (4)(iii) of this section, the remaining charges shall be disclosed as an aggregate amount in the last line permitted under paragraphs (g)(2)(vi), (g)(3)(v), or (g)(4)(iii), as applicable, using the label “Additional Charges.””
These aggregate amounts are only permitted on the Loan Estimate.
A) LE Aggregate Amounts That Are Calculated Using Rounded Amounts
- Closing Cost Details – Loan Costs (f)
- Origination Charges [Section A] (f)(1)
- Services You Cannot Shop For [Section B] (f)(2)
- Services You Can Shop For [Section C] (f)(3)
- Closing Cost Details – Other Costs (g)
- Taxes and Other Government Fees [Section E] (g)(1)
- Prepaids – Homeowner’s Insurance Premium [Section F] (g)(2)(i)
- Prepaids – Mortgage Insurance Premium [Section F] (g)(2)(ii)
- Prepaids – Property Taxes [Section F] (g)(2)(iv)
- Other [Section H] (g)(4)
B) LE Aggregate Amounts That Are Calculated Using Unrounded Amounts
- Initial Escrow Payment at Closing [Section G]
- Homeowner’s Insurance (only monthly amount) (g)(3)(i)
- Mortgage Insurance (only monthly amount) (g)(3)(ii)
- Property Taxes (only monthly amount) (g)(3)(iii)
- Maximum of Five Additional Escrow Items (only monthly amount) (g)(3)(v)
LE Percentages
12 CFR § 1026.37(o)(4)(ii) states:
“The percentage amounts required to be disclosed under paragraphs (b)(2) and (6), (f)(1)(i), (g)(2)(iii), (j), and (l)(2) and (3) of this section shall be disclosed by rounding the exact amounts to three decimal places and then dropping any trailing zeros that occur to the right of the decimal place.”
The percentages that are to be rounded to three decimal places while dropping any trailing zeros that occur to the right of the decimal place, are:
- Interest Rate (b)(2)
- Adjustment in Interest Rate (b)(6)(ii)
- Origination Charges – Percentage of Loan Amount (Points) (f)(1)(i)
- Prepaid Interest (Per Diem) (g)(2)(iii)
- Adjustable Interest Rate Table (j)
- Annual Percentage Rate (l)(2)
- Total Interest Percentage (l)(3)
CD Percentages
12 CFR § 1026.38(t)(4)(ii) states:
“The percentage amounts required to be disclosed under paragraphs (b), (f)(1), (n), and (o)(4) and (5) of this section shall be disclosed by rounding the exact amounts to three decimal places and then dropping any trailing zeros to the right of the decimal point.”
The percentages that are to be rounded to three decimal places with dropping any trailing zeros that occur to the right of the decimal point, are:
- Interest Rate 1026.37(b)(2)
- Adjustment in Interest Rate 1026.37(b)(6)(ii)
- Origination Charges – Percentage of Loan Amount (Points) 1026.37(f)(1)
- Adjustable Interest Rate Table (n)
- Annual Percentage Rate (o)(4)
- Total Interest Percentage (o)(5)
System Settings and Fields for the LE/CD Percentages in ConformX
- System Setting for rounding or truncating the non-APR percentages on the Loan Estimate:
- Loan Estimate Interest Rate Display Option (TRID) – (Field 95498)
- Options:
- Round to 3 Decimals
- Truncate to 2 Decimals
- Truncate to 3 Decimals
- System Setting for rounding or truncating the non-APR percentages on the Closing Disclosure:
- Closing Disclosure Interest Rate Display Option (TRID) – (Field 102191)
- Options:
- Round to 3 Decimals
- Truncate to 2 Decimals
- Truncate to 3 Decimals
- Field for rounding or truncating the APR on the Loan Estimate:
- Loan Estimate APR Display Option (TRID) – (Field 102057)
- Options:
- Round to 3 Decimals
- Truncate to 3 Decimals
- Field for rounding or truncating the APR on the Closing Disclosure:
- Closing Disclosure APR Display Option (TRID) – (Field 102200)
- Options:
- Round to 3 Decimals
- Truncate to 3 Decimals
- Field for controlling the trailing zeros on non-APR percentages on the LE and CD:
- Interest Rate Trailing Zero Options (TRID) – (Field 102056)
- Options:
- Do Not Drop Trailing Zeros – (7.500% stays 7.500%)
- Drop All Trailing Zeros – (7.500% to 7.5%)
- Drop Trailing Zero in Third Decimal – (7.500% to 7.50%)
- Field for controlling the trailing zeros on the APR on the LE and CD:
- APR Trailing Zero Options (TRID) – (Field 102055)
- Options:
- Do Not Drop Trailing Zeros – (7.500% stays 7.500%)
- Drop All Trailing Zeros – (7.500% to 7.5%)
- Drop Trailing Zero in Third Decimal – (7.500% to 7.50%)
Defaults for the LE/CD Percentages in ConformX
1. Non-APR percentages on both the Loan Estimate and Closing Disclosure are rounded to three decimal places by default.
2. APR percentages on both the Loan Estimate and Closing Disclosure are also rounded to three decimal places by default.
3. By default, trailing zeros are not dropped from percentages on the Loan Estimate or Closing Disclosure unless the number is a whole number. This means that a percentage of 3.5% will display as 3.500% and a percentage of 3.25% will display as 3.250%.
Any or all of these defaults can be changed as desired by using the appropriate System Setting or field, as outlined above.