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5 Things to Know About the Recent Updates to "Know Before You Owe"
By Mike Volin, Vice President – Legal at Title Resource Group
Last week, the Consumer Financial Protection Bureau (“CFPB”) issued the first major amendment to its “Know Before You Owe” (“TRID”) rules, that went into effect on October 3, 2015.

The initial rollout of TRID, nearly two years ago, impacted the loan application process, the forms consumers would receive and the overall closing process. It will take time to digest the 500-plus page amendment’s full impact, but here are five things you should know about it:
  1. The amendment has a flexible time frame for implementation. With TRID, lenders had to wait until October 3, 2015, to begin using the new rules on new loan applications. The amendment is different. While the amendment is effective in about two months (depending on when the amendment is published in the official “Federal Register”), compliance is not mandatory until October 1, 2018. There are a few exceptions to this timeline, but basically, this allows lenders to begin complying with the rules as soon as they have new systems and processes in place.
  2. The total payment tolerance is adjusted to align with the tolerance for the finance charge. Currently, TRID does not make specific use of the “finance charge” in calculating the tolerance for total payments (the amount by which the total payment might change between what the lender estimated and the actual charges at closing). The amendment makes technical changes so that the tolerance for the total payment parallels the tolerance for the finance charge.
  3. The amendment seeks to encourage lenders to partner with housing finance agencies to make housing assistance lending. Specifically, the amendment clarifies that recording fees and transfer taxes can be charged without losing a partial exemption for certain disclosure requirements. In addition, the amendment excludes those fees and taxes from the exemption’s limits on costs.
  4. The amendment extends TRID’s coverage to include all cooperative units. Currently, TRID only covers cooperative units in some states, depending on whether that specific state considers a cooperative unit as real property or personal property.
  5. The amendment addresses the sharing of information with transaction participants. Following implementation of the original TRID rules, there was much debate about sharing of the borrower’s disclosures with others involved in the transaction (seller and brokers, for example). The Bureau now acknowledges that it “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.” To account for this fact of life, the Bureau includes “additional commentary to clarify how a creditor may provide separate disclosure forms to the consumer and the seller.”
As with any major rule or amendment, time will bring both more clarity and questions. So don’t be surprised to hear more about what the amendment means as we get closer to the October 1, 2018 mandatory implementation date.

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