After nearly nine months of watching lenders struggle to fully implement the TILA-RESPA Integrated Disclosures (TRID) regulations that went live in late 2015, the Consumer Financial Protection Bureau (CFPB) released a series of proposed amendments. While there are no large individual changes, depending on a business’s practices, there are several small tweaks that could greatly impact the lender’s processes and procedures.
Understanding what is – and what is not – in the proposed changes will help lenders prepare for the next phase of TRID.
Erasing the Gray Zones
The changes in the rules will not result in any major form or document changes. Essentially, the CFPB has compiled and formalized some of the rule clarifications and informal guidance that had been distributed over the past several months. Here is a summary of some of the larger changes included in the proposed rule.
The first is in changing how the tolerances for the total of payments are calculated. Under the amendment, tolerance provisions would include the total of payments that parallel existing tolerances for the finance charge and disclosures affected by the finance charge.
The second major change involves how the exemption for housing assistance loans is applied. The proposed change clarifies which fees and taxes are included in the analysis to determine whether a housing assistance loan is exempt from the rule.
The new proposal also extends TRID’s coverage to include cooperative units, simplifying compliance for lenders. Because a coop loan is sometimes not considered a real property transaction, the rule change makes it so that all coop purchases are treated the same.
The new rules also clears up some technical issues regarding the calculating cash to close table. These technical changes adjust the way lenders calculate and disclose the closing cost financed and down payment funds from and for borrowers.
Most of these clarifications are good. They remove the grey areas that can plague a compliance department and waste time and money trying to implement unclear regulations.
Some Areas Still Need Clarity
Unfortunately, there are still some areas that need clarification. The most significant involves cures for small technicalities. The CFPB has commented extensively that they were not going to take up cures because it would lessen the industry incentive to get things right the first time, but providing a simple way to cure minor, inadvertent errors can help lenders avoid scratch-and-dent secondary sales or costly, time-consuming reengagements with the borrowers to redo the mortgage.
The other area that needs clarity is in the disclosure for closing costs. While the proposed rules fixed the cash to close table processes and calculations, the disclosure itself is not as useful for borrowers. The way information is currently shared does not reflect closing costs that will be financed in the loan and the disclosure of down payment is not what is commonly understood by borrowers. Lenders want a standard way to disclose how much cash the borrower needs to bring and accurately reflect what is required in cash and what is being funded as part of the loan.
Let Your Voice Be Heard
There is still time to provide the CFPB feedback on the TRID revisions. Open comments are available until October 18, 2016. The CFPB has indicated it expects to issue the final rule in April 2017, putting an implementation date in late 2017 or early 2018.
And let us know what you think. What has the CFPB gotten right about the changes? Where would you like to see additional revisions to TRID? Let us know in the comment section.
And no matter what the final rule looks like, Docutech will have you prepared with its compliant document and disclosure engine. Learn how we can lower your compliance costs while improving customer experience by requesting a demo today.