CFPB finalizes TRID update without a fix for compliance 'black hole'

The Consumer Financial Protection Bureau's final rule to formalize guidance on a number of TILA-RESPA Integrated Disclosures compliance points omits an originally proposed fix for the so-called black hole that's created when a mortgage closing is delayed.

The TRID changes were first proposed last July and included guidance on the circumstances when a creditor can use the Closing Disclosure form, instead of the upfront Loan Estimate, to determine if an estimated closing cost was disclosed in good faith and within tolerance. But the provision did not make it into the final rule.

Instead, the CFPB published a proposal for a new round of comments that attempts to clarify the circumstances that a creditor can use the Closing Disclosure form, instead of the upfront Loan Estimate, to determine if an estimated closing cost was disclosed in good faith and within tolerance.

Still, as advertised, the new rule made official some of the informal guidance the agency gave since issuing the original rule, but it did not "reopen any major policy decisions."

"MBA appreciates the CFPB’s efforts in amending the Know Before You Owe rule to address several significant questions that have been raised for some time by our industry," Mortgage Bankers Association President and CEO David Stevens said in a statement.

The update did not include additional cure provisions for violations as the industry desired. It also did not make changes to the way title insurance premiums are disclosed, an issue the title industry said was misleading to consumers.

"As the only financial services trade to oppose any CFPB authority over credit unions, NAFCU has long pressed the bureau to improve the TRID rule and related guidance. NAFCU will continue to push for more clarity and transparency wherever possible in the CFPB's approach to TRID compliance," Brandy Bruyere, vice president of regulatory compliance for the National Association of Federally-Insured Credit Unions, said in a statement.

The new rule makes clear that all loans used to purchase a co-operative apartment are covered by the Know Before You Owe disclosures. Until now, the TRID disclosures only had to be given in states where co-ops are considered to be real estate; some states consider co-ops to be personal property because the owner has shares in a legal entity and does not own a physical property.

With this update, the total of payments calculation did not change. However, the agency created a new tolerance provision similar to the existing statutory tolerance provisions for the finance charge and other disclosures affected by the finance charge.

The final rule also included a clarification that makes more loans from housing assistance programs eligible for a partial exemption from the regulation, which in turn should increase the number of these loans, the CFPB said.

The rule does address issues around privacy and the sharing of information with the real estate agent and the seller. The CFPB is finalizing additional commentary to clarify how a creditor may provide separate disclosure forms to the consumer and the seller.

"Consumers depend on their real estate agent to help guide them from pre-approval to closing, but that job is significantly harder when an agent is denied access to the closing disclosure."

"The CFPB has again made clear that lenders may share disclosures with third parties, including real estate agents," National Association of Realtors President William Brown said in a statement. "This was common practice for years in advance of Know Before You Owe, and Realtors are eager to see that cooperative atmosphere take hold once again."