The comment period for proposed changes to the ‘Know Before You Owe’ rule, also referred to as the TILA-RESPA Integrated Disclosures (TRID) rule, is now open. Given the laundry list of grievances the lending world has put together since the rule’s implementation last October, the next several months are sure to be busy for the Consumer Financial Protection Bureau, legislators, lenders, and associations representing the mortgage industry. Here’s what lenders need to know.
What TRID Changes & Why?
There have been some significant challenges in the industry since the TRID rule went into effect. According to the CFPB’s Summary of the Proposed Rule:
“The Bureau is not proposing to reopen major policy decisions with this rulemaking but is proposing a few more substantive changes in a limited number of situations in which the Bureau has identified potential discrete solutions to specific implementation challenges.”
(Text bolded by us, not the CFPB.)
An associate at BuckleySandler told Housing Wire she was surprised at how often the bureau directly asks for industry feedback. In fact, there are more than 150 instances of the phrase “seeks comment” in the TRID proposal.
Key Points to Review
A few industry victories were clear the day of the proposal announcement. Perhaps the biggest win was the bureau’s changes to Closing Disclosure form guidelines, which address the lion’s share of lenders grievances. Other important items found in the Amendments to Federal Mortgage Disclosure Requirements Under the Truth in Lending Act (Regulation Z):
• Create tolerances for the total of payments
• Adjust a partial exemption that mainly affects housing finance agencies and nonprofits
• Provide a uniform rule regarding application of the integrated mortgage disclosure requirements to cooperative units
• Provide guidance on sharing disclosures with various parties involved in the mortgage origination process
Minor Items to Review
According to the CFPB, the nearly 300-page document also includes “more minor changes and technical corrections” to address a variety of topics, including:
• Affiliate charges
• The calculating cash to close table
• Construction loans
• Decimal places and rounding
• Escrow account disclosures
• Escrow cancellation notices
• Expiration dates for the closing costs disclosed on the Loan Estimate
• Gift funds
• The “In 5 Years” calculation
• Lender and seller credits
• Lenders’ and settlement agents’ respective responsibilities
• The list of service providers
• Model forms
• Non-obligor consumers
• Partial payment policy disclosures
• Payment ranges on the projected payments table
• The payoffs and payments table
• Payoffs with a purchase loan
• Post-consummation fees
• Principal reduction (principal curtailment)
• Disclosure and good-faith determination of property taxes and property value
• Rate locks
• Recording fees
• Simultaneous second lien loans
• The summaries of transactions table
• The total interest percentage calculation
How Can You Participate?
Would you like to provide feedback on some issues within the proposed TRID rule? The comment period is your opportunity to voice your concerns about anything that you think goes too far, not far enough, or remains unclear. If you choose to respond, the CFPB must receive your comment by October 18, 2016. For more information about the TRID proposal and how to submit comments, visit the Federal Register.
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