The Consumer Financial Protection Bureau (CFPB) recently finalized updates to the TILA-RESPA Integrated Disclosure rule (TRID), or “Know Before You Owe,” including clarifying the sharing of the Closing Disclosure (CD) with third parties—a concern for many in the housing industry since the rule’s implementation in October 2015.
“The Bureau understands that it is usual, accepted, and appropriate for creditors and settlement agents to provide a Closing Disclosure to consumers, sellers, and their real estate brokers or other agents,” according to a statement by the CFPB on the finalized updates. “The Bureau is finalizing additional commentary to clarify how a creditor may provide separate disclosure forms to the consumer and the seller.”
Under TRID, mortgage lenders are required to furnish the CD, which includes loan information, to borrowers at least three business days before closing, but they have been reluctant to share the CD with other parties involved in the transaction in an effort to ensure compliance. Since the rule took effect, the housing industry has sought further details on lenders’ ability to share the CD with other professionals, including real estate agents.
The National Association of REALTORS® (NAR) applauded the finalized update, calling it “a victory for real estate professionals nationwide.”
“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,” said NAR President Bill Brown in a statement. “The CFPB has again made clear that lenders may share disclosures with third parties, including real estate agents. 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.”
Other updates to the rule, per the CFPB statement, include:
The Bureau is finalizing updates to extend the rule’s coverage to include all cooperative units. Currently, the rule only covers transactions secured by real property, as defined under state law. Cooperatives are sometimes treated as personal property under state law and sometimes as real property. By including all cooperatives in the rule, the Bureau is simplifying compliance and ensuring that more consumers benefit from the rule.
Housing Assistance Lending
The Know Before You Owe mortgage disclosure rule gave a partial exemption from disclosure requirements to certain housing assistance loans, which are originated primarily by housing finance agencies. The Bureau’s update, as finalized, promotes housing assistance lending by clarifying that recording fees and transfer taxes may be charged in connection with those transactions without losing eligibility for the partial exemption. The update also excludes recording fees and transfer taxes from the exemption’s limits on costs. Through the update, more housing assistance loans will qualify for the partial exemption, which should encourage these loans.
Tolerances for the Total of Payments
Before the Know Before You Owe mortgage disclosure rule, the total of payments disclosure was determined using the finance charge as part of the calculation. The Know Before You Owe mortgage disclosure rule changed the total of payments calculation so that it did not make specific use of the finance charge. The Bureau is now finalizing updates to include tolerance provisions for the total of payments that parallel the tolerances for the finance charge and disclosures affected by the finance charge.
The CFPB also issued a proposal to clarify when lenders can “use a CD, instead of a Loan Estimate, to determine if an estimated closing cost was disclosed in good faith and within tolerance.” The proposal will be open to feedback for 60 days after it is published in the Federal Register.
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