CFPB

Learn how the TRID amendment affects you.

The TILA-RESPA Integration Disclosure (TRID) rule has created sweeping changes affecting business as usual. As the Consumer Financial Protection Bureau continues to adjust the terms of compliance, count on us to keep you informed. The following chart details the most recent changes to TRID.

Lender Title Agent Real Estate Agent Home Buyer Topic/Description
Effective Date
On Friday, July 7, 2017, the Consumer Financial Protection Bureau (CFPB) published the long awaited final amendment to the TILA-RESPA Integrated Disclosure (TRID) rule. The effective date of the rule is October 10, 2017, however, the amendment states a “mandatory compliance date of October 1, 2018”. So, every lender will make compliance changes at different times and may instruct and require settlement agents to implement these changes sooner rather than later. Also, the same lender may implement some changes before other changes, so it is important to read lender closing instructions and correspondence carefully.
Purpose of Amendment
The amendment is intended to formalize the guidance provided after the publication of Know Before You Owe (KBYO)/TRID and to provide greater clarity and certainty.
 
Disclosure of Simultaneous Title Insurance and Optional Owner’s Policy of Title Insurance
The amendment does not contain any changes to the disclosure of simultaneous-issuance title premiums, nor does it contain any changes to the option for owner’s title insurance.
Sharing the Disclosures
With regard to sharing the Closing Disclosure (CD), the CFPB clarifies in the amendment that the CD, whether in combined or separate forms, meets the Gramm-Leach-Bliley Act (GLBA) exception in sections 502(e)(1) and 509(7)(A), unless the creditor’s closing instructions prohibit the settlement agent from providing such disclosure to other parties.
It is usual, appropriate and acceptable for the creditor or settlement agent to provide a separate CD to the borrower and the borrower’s agents. Moreover, the creditor may not prohibit the settlement agent from sharing the borrower’s CD with the borrower’s real estate agent or broker.
It’s also important to remember that some states have laws with stricter requirements than GLBA, which must be complied with when sharing Disclosures and private financing information. The amendment provides extensive discussion on existing privacy requirements under GLBA, Regulation P and state law.
Expansion of Partial Exemption for Down-Payment and Homeowner-Assistance Programs
The amendment will exclude recording fees and transfer tax from the calculation of the 1% threshold. 1026.3(h)(5). This will place limits on costs, which will encourage lenders to make these types of loans in partnership with housing-finance agencies. This rule also gives creditors more flexibility in providing the Disclosures without losing the exemption. It is likely that we will see more of these limited-term loans for the specific purposes of assisting home buyers with wide-ranging needs such as down payments, closing costs, property rehabilitation, energy-efficiency assistance, or foreclosure avoidance or prevention, as provided by certain housing-finance agencies.
     
Minor Changes and Technical Corrections
The rule includes a number of other changes, described by the Bureau as minor changes and technical corrections, which are not addressed here. They include:
  • Decimal places and rounding
  • Escrow cancellation notices
  • Gift funds
  • The “In 5 Years” calculation
  • Lender credits
  • Lenders’ and settlement agents’ respective responsibilities
  • Model forms
  • Payment ranges on the Projected Payments table
  • The Payoffs and Payments table
  • Payoffs with a purchase loan
  • Disclosure and good-faith determination of property taxes and property value
  • The Summaries and Transactions table
  • The Total Interest
  • Percentage (TIP) calculation
  • Informational updates to the Loan Estimate
 
Bona Fide Closing Costs
All charges must be bona fide regardless of whether they are paid to an affiliate. This means that the services were actually performed and meet determination of good faith under §1026.19(e)(1)(i).
 
Affiliate Charges
The amendment clarifies that certain fees are still excluded from the zero and 10% tolerances, even if the provider is an affiliate of the lender or loan originator. These include owner’s title insurance, as well as insurance premiums; amounts placed into an escrow; charges for required services the borrower can shop for when selecting a provider that is not on the Written List of Providers (as long as the list is actually provided); and charges paid for services not required by the lender.
Trusts
The rule currently covers land trusts that extend credit to a borrower. Land trusts may be a private or nonprofit organization, or individuals or families that actively work to conserve land by undertaking or assisting in land or conservation easement acquisition, or through stewardship of such land or easements. The amendment comment 2(a)(11)-3 seeks to clarify that, in addition to credit extended to land trusts, credit extended to trusts established for tax- or estate-planning purposes is also considered to be extended to a natural person for purposes of the definition of borrower in 12 CFR §1026.2(a)(11), consistent with comment 3(a)-10. The Disclosures may be provided to the trustee on behalf of the trust unless the transaction is rescindable. The Disclosures must also be given separately to each consumer, who has the right to rescind under §1026.23. This may require a review of the terms of the trust to determine whether the trustee alone has authority to rescind or whether other parties, such as the beneficiaries of the trust, also have the authority to rescind the loan transaction.
     
TRID Black Hole
The Bureau did not finalize its proposed amendment to address the “black hole” that prevents creditors from using the CD to reset tolerances except in a very limited set of circumstances. Instead, the Bureau issued a proposal that would allow credits to reset the tolerance using the CD without regard to when the closing will occur. https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/20 1707_cfpb_Proposed-Rule_Amendments-to-Federal-Mortgage-Disclosure-Requirements_TILA.pdf
 
Recording Fees
The Bureau understands that there is uncertainty as to how recording fees should be disclosed on the CD. The Bureau’s amendment to the rule clarifies that the total amount of fees for recording deeds and the total amount of fees for recording security instruments must each be disclosed on the first line under the subheading “Taxes and Other Government Fees” before the columns on the CD. 1026.38(g)(1) and new comment 38(g)(1)-3. Recording fees should be disclosed separately from transfer tax. See §1026.38(g)(1)(ii).
 
Construction Loans
The final rule clarifies how construction loans should be disclosed. This includes treatment of construction-loan inspection and handling fees considered as loan costs associated with the construction transaction for purposes of §1026.37(f).The amendment contains a new requirement that fees must be disclosed in an addendum to both the Loan Estimate and the CD, under the heading “Inspection and Handling Fees Collected After Closing”, if the fees are collected after consummation. If inspection and handling fees are collected at or before consummation, the total of such fees is disclosed in the Loan Costs table.
 
Limitations on Disclosure of Construction Costs, Existing Lien Payoffs and Unsecured Debt Payoffs
The Bureau reversed course from its proposal regarding disclosure of construction costs, existing lien payoffs and unsecured debt payoffs. These fees are now required to be disclosed in the Summaries of Transactions table for the standard CD or in the Payoffs and Payments table for the alternative CD.
 
Subordinate Financing and Seller CDs
In a purchase transaction with a simultaneous loan for subordinate financing, the settlement agent is in compliance with the requirement to provide the seller with a copy of the CD by providing the seller with only the CD for the first lien transaction, assuming the CD has the entirety of the seller’s transaction recorded. 1026.19(f)(4)(i). Otherwise, the settlement agent must provide the seller with a copy of the CD for both the first lien and the simultaneous loan for subordinate financing, in accordance with comment 19(f)(4)(i)-1.
 
Cure Provisions
There are no additional cure provisions for errors made in the Loan Estimate or CD. The CFPB has expressed concerns that further definition of cure provisions would undermine incentives for compliance with the rule.
 
Application of TRID rule to Cooperative Units
The KBYO/TRID rule will now apply to all loans secured by cooperative units regardless of whether or not they are considered real property under state law.

The information and dates provided are for informational purposes and are subject to change without notice. Seek legal, tax or other professional advice before relying upon this information.