Today, the CFPB officially released the finalized updates to its “Know Before You Owe” mortgage disclosure rule, also known as the TILA-RESPA Integrated Disclosure Rule (TRID). According to the Bureau’s press release, the new amendments are intended to “formalize guidance in the rule, and provide greater clarity and certainty.”
TRID first took effect in October 2015. Last April, the Bureau responded to industry concerns and agreed to revisit the rule to determine whether it should incorporate informal guidance into the regulation text and commentary. In July 2016, the CFPB released a set of proposed updates to the rule and gave the industry approximately three months to submit comments on the proposal.
In addition to clarifications and technical corrections, the amendments also address several other issues within the rule, including:
1. Tolerances for the total of payments:
Before the Know Before You Owe mortgage disclosure rule, the total of payments disclosure was determined using the finance charge as part of the calculation. The Know Before You Owe mortgage disclosure rule changed the total of payments calculation so that it did not make specific use of the finance charge. The Bureau is now finalizing updates to include tolerance provisions for the total of payments that parallel the tolerances for the finance charge and disclosures affected by the finance charge.
2. Housing assistance lending:
The Know Before You Owe mortgage disclosure rule gave a partial exemption from disclosure requirements to certain housing assistance loans, which are originated primarily by housing finance agencies. The Bureau’s update, as finalized, promotes housing assistance lending by clarifying that recording fees and transfer taxes may be charged in connection with those transactions without losing eligibility for the partial exemption. The update also excludes recording fees and transfer taxes from the exemption’s limits on costs. Through the update, more housing assistance loans will qualify for the partial exemption, which should encourage these loans.
The Bureau is finalizing updates to extend the rule’s coverage to include all cooperative units. Currently, the rule only covers transactions secured by real property, as defined under state law. Cooperatives are sometimes treated as personal property under state law and sometimes as real property. By including all cooperatives in the rule, the Bureau is simplifying compliance and ensuring that more consumers benefit from the rule.
4. Privacy and sharing of information:
The Know Before You Owe mortgage disclosure rule requires creditors to provide certain mortgage disclosures to the consumer. The Bureau has received many questions about sharing the disclosures provided to consumers with third parties to the transaction, including the seller and real estate brokers. The Bureau understands that it is usual, accepted, and appropriate for creditors and settlement agents to provide a Closing Disclosure to consumers, sellers, and their real estate brokers or other agents. The Bureau is finalizing additional commentary to clarify how a creditor may provide separate disclosure forms to the consumer and the seller.
The finalized 560-page TRID Rule becomes effective 60 days after it is published in the Federal Register. However, the mandatory compliance date is October 1, 2018.
In addition to the finalized updates, the CFPB also released a limited follow-up proposal. The Bureau issued the follow-up proposal to look into when a creditor may use a Closing Disclosure, instead of a Loan Estimate, to determine if an estimated closing cost was disclosed in good faith and within tolerance.
Comments on the follow-up proposal are due 60 days after its publication in the Federal Register and will be weighed carefully before a final regulation is issued.