The Consumer Financial Protection Bureau (CFPB) released final amendments to its “Know Before You Owe” mortgage disclosure rule, which is also known as the TILA-RESPA Integrated Disclosure rule (TRID), on July 7, 2017. As stated in the accompanying press release issued by the CFPB, the amendments “are intended to formalize guidance in the rule, and provide greater clarity and certainty” and “will facilitate implementation of the Know Before You Owe rule by the mortgage industry.” These final amendments have been eagerly anticipated by the mortgage industry since the initial publication of the proposed amendments in July of 2016.
The amendments implement a number of clarifications and updates, in addition to technical corrections and commentary, to the TRID rule, including but not limited to:
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Tolerance provisions related to the total of payments which parallel those for the finance charge;
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Expansion of the partial exemption for certain housing assistance loans which excludes recording fees and transfer taxes from the cost limits for such loans;
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Extension of the coverage of the TRID rule to include all cooperative units;
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Commentary which clarifies how separate disclosures may be provided to the consumer, seller, and other third parties such as real estate agents; and
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Guidance regarding the proper disclosure of construction and construction-permanent loans, including disclosures related to fee allocation, post-closing fees, and construction proceeds.
The amendments become effective 60 days after publication in the Federal Register, so creditors will have the option to begin applying the new rules on or after such effective date. Compliance will become mandatory for all loan applications taken on or after October 1, 2018, and the escrow cancellation notice and partial payment policy disclosure must be provided beginning on this date for all loans to which the disclosures apply, regardless of when the creditor received the consumer’s application.
While the amendments to the rule address and clarify various topics, notably they do not address the so-called “black hole” issue which relates to the circumstances in which a Closing Disclosure may (or may not) be used to determine whether certain estimated charges were disclosed in good faith. The industry had been hoping for much-needed clarity on this topic, but instead the CFPB simultaneously issued a separate proposed rule which addresses “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 new proposal are due 60 days after its publication in the Federal Register.
