TRID Clarifications Proposed by the Consumer Financial Protection Bureau

On July 29th, 2016, the Consumer Financial Protection Bureau (CFPB) issued a proposal to clarify some of the issues/ambiguities regarding the TRID rule that have emerged in the past year.   The CFPB has requested that public comments to the proposed changes be submitted by October 18, 2016.   You may read the proposed changes in their entirety here. The effective date of the proposed changes is still uncertain but would likely be sometime in 2017. 

Here is an overview of some of the key changes and clarifications that will have the most direct impact on our clients:

  • Revocable Living Trusts are “Consumers” under TRID and are subject to the  TRID requirements
  • One-Time Close Construction Loans
    • If Lender Uses Two Closing Disclosures– When the transaction is disclosed on two Closing Disclosures (one for the Construction Phase and one for the Permanent Loan Phase), the Creditor will be more limited in how they may allocate closing costs between the two Closing Disclosures  
    • Fees to be Paid after Closing– Any fees known at closing but not paid until after closing should be disclosed in a separate addendum – e.g. Lender’s Inspection fees collected after closing
    • If Lender Uses Standard Closing Disclosure– If using the Standard Closing Disclosure, the payment to the contractor and the lot payoff must be disclosed in Section H of theClosing Disclosure, not in the Summaries of Transaction Table. 
    • If Lender Uses Alternative Closing Disclosure– If using the Alternative Closing Disclosure for transactions without a seller, the Payoffs and Payments Table may be used to disclose these items
  • Loan Estimate (LE)
    • Informational Loan Estimates – When a cost changes but a changed circumstance is not triggered, the Creditor mayprovide a revised LE without resetting tolerances.  However, all costs on the informational LE should reflect the best information reasonably available, not just the cost the Creditor is updating.
    • Best Information Reasonably Available–  A revised LE that resets tolerances must also update other costs to reflect the best information reasonably available
    • Closing Cost Expiration – The Creditor may disclose a date later than 10 business days after the LE is provided but the Creditor must honor the later date.  Once the borrower has indicated an Intent to Proceed, the closing cost expiration must be left blank.
  • Shopping & Written List of Providers
    • How does a Creditor permit the Consumer to shop?
      • The Creditor must:
        • Set out what the Consumer can shop for on the LE at “Section C. Services You Can Shop For
        • Provide a Written List of Providers that identifies at least one available Provider for each service
        • State in Written List of Providers that  the Consumer may choose a different Provider
    • No Requirement for Creditor to List Providers’ Costs – Creditors do not need to include cost on its Written List of Providers, even though the CFPB  model form includes a cost column
  • Appraised Prop. Value
    • When there is no seller and the Creditor has performed their own appraisal of the property, the Creditor’s appraisal must be used for the “Appraised Prop. Value”
  • Total of Payments
    • Borrower-Paid Only– Total of Payments on the CD includes only borrower-paid loan costs (does not include loan costs paid by seller or paid by others)
    • New tolerance – Total of Payments is accurate if:
      • it is understated by no more than $100 or
      • it is overstated
  • Providing CDs to 3rd parties
    • Title companies are required to provide Seller’s CD to the Creditor
    • Creditors may provide CD to real estate agents without violating privacy laws.  (Note: The third party financing addendum to the TREC contract contains specific authorization to release the CD to the consumer’s real estate agent.)

If you have any questions or concerns about these proposed changes, please give us a call at (210) 828-5844,

242 W. Sunset, Ste. 201
San Antonio, TX 78209