In July 2017, the Consumer Financial Protection Bureau (CFPB) finalized updates to the TILA-RESPA Integrated Disclosure (TRID). Creditors must comply with the final rule beginning October 1, 2018; however, the rule includes an optional compliance period from its effective date, which is 60 days after its publication in the Federal Register.
The CFPB issued the final rule with the intent to formalize guidance and provide greater clarity and certainty. Along with providing for clarifications, technical corrections and commentary, the final rule also implements a few substantive changes to TRID. Some of these changes include:
- Total of Payments Tolerance: A tolerance has been established for the total of payments to parallel the tolerances applicable to finance charges. In general, the total of payments disclosure is considered accurate if it’s understated by no more than $100. It’s not a violation if the amount disclosed is overstated.
- Partial Exemption for Housing Assistance Loans: Two amendments adjust a partial exemption from the integrated disclosure requirements for certain noninterest-bearing subordinate lien transactions that provide down payment and other homeowner assistance. This primarily affects housing finance agencies and not-for-profits.
- Cooperative Units: Coverage is expanded to include transactions involving cooperative units to the integrated disclosure requirements. Previously, coverage depended on whether state law classified the cooperatives as real property.
- Privacy & Sharing Disclosures: Amendments incorporate and expand on previous official interpretations to the regulation to provide greater clarity. The final rule clarifies the three methods a creditor may use to make modifications to the Closing Disclosure to separate consumer and seller information.
- Construction Loans: Several disclosure provisions are amended as they relate to construction loans. A few of these provisions include, but aren’t limited to:
- The timing of the Loan Estimate when construction-to-permanent loans are disclosed as two separate transactions
- Requirements associated with finance charge and fee allocation
- Completion of loan terms and projected payments disclosures
- Loan Estimates: The final rule amends and clarifies several requirements related to the Loan Estimate, including range-of-payment disclosure, specific and general lender credits labeled as “Lender Credits,” exclusion of prepaid interest someone other than the consumer will pay in the Total Interest Percentage, etc.
- Closing Disclosures: The final rule amends and clarifies several requirements related to the Closing Disclosure, including itemization of taxes and other government fees, initial payment amount for certain escrow account disclosures, etc.
In addition to the issues addressed above, the CFPB incorporated numerous other clarifications and technical corrections. These matters include, but aren’t limited to:
- Certain calculations, such as the Total Interest Percentage, Cash to Close and payments in five years
- Decimal places and rounding
- Escrow account disclosures
- Escrow cancellation notices
- Expiration dates for closing costs
- Lender and seller credits
- List of service providers
- Loans to certain trusts
- Partial payment policy disclosures
- Payment ranges for projected payments table
- Post-consummation fees
- Simultaneous subordinate lien loans
Concurrently with this rule’s issuance, the CFPB issued a separate proposal to further amend TRID. The proposal addresses the concern commonly referred to as the “black hole” issue, wherein creditors may not be able to use a Closing Disclosure to reset fee tolerances. As stated in the proposal’s summary, the proposed amendments relate to when a creditor may compare charges paid by or imposed on the consumer to amounts disclosed on a Closing Disclosure, instead of a Loan Estimate, to determine if an estimated closing cost was disclosed in good faith. Specifically, the proposed amendments would permit the creditors to do so regardless of when the Closing Disclosure is provided relative to consummation. Comments are due 60 days after the proposal’s publication in the Federal Register.