Removing Barriers Blog

Comment Call for Proposed Amendments to TRID Rule
Posted August 30, 2016 by CUNA Advocacy

Due to advocacy efforts from CUNA and several other financial services trade groups, the CFPB has finally issued a proposed rule to amend the Federal Mortgage Disclosure Requirements under the Truth in Lending Act (Regulation Z).  Our comment call with and executive summary of the proposal and a link to the text is available here, and we are urging all credit union stakeholders to submit their comments on these changes.

This Rule is commonly referred to as the “TRID” rule  (TILA-RESPA Integrated Disclosures),  “KBYO” (Know Before You Owe) Rule, or “TILA-RESPA” Rule, finalized in January 2015 and became effective October 3, 2015.  

This proposed rule attempts to fix numerous operational and technical issues with the original TILA-RESPA, rule but is not intended to open up the rule for significant policy changes.

The proposed amendments effectively codify the Bureau’s informal guidance on various issues, and include clarifications and technical amendments. The Bureau is also proposing tolerance provisions for the total of payments, an adjustment to a partial exemption mainly affecting housing finance agencies and nonprofits, extension of coverage of the integrated disclosure requirements to all cooperative units, and guidance on sharing the disclosures with various parties involved in the mortgage origination process. 

Among other changes, the proposal:  

  • Creates tolerances for the total of payments. The Truth in Lending Act establishes certain tolerances for accuracy in calculating the finance charge and disclosures affected by the finance charge. In light of changes to certain underlying regulatory definitions made by the TILA-RESPA Rule, the proposal establishes express tolerances for the total of payments to parallel the existing provisions regarding the finance charge.  

  • Adjusts a partial exemption that mainly affects housing finance agencies and nonprofits. The existing rule provides a partial exemption for certain non-interest bearing subordinate lien transactions that provide down payment and other homeowner assistance (housing assistance loans). The Bureau has learned that the exemption may not be operating as intended and is proposing two amendments to expand the reach of the partial exemption.
     
  • Provides a uniform rule regarding application of the integrated mortgage disclosure requirements to cooperative units. Under the existing rule, coverage of cooperative units depends on whether cooperatives are classified as real property under State law. Because State law sometimes treats cooperatives differently for different purposes, there may be uncertainty and potential inconsistency among market actors. The proposal requires provision of the integrated disclosures in transactions involving cooperative units, whether or not cooperatives are classified under State law as real property.  

  • Provides guidance on sharing disclosures with various parties involved in the mortgage origination process. The Bureau is proposing further guidance concerning the sharing of disclosures with sellers and various other parties, including real estate agents, involved in the origination process in light of privacy concerns. The proposal incorporates and expands upon previous webinar guidance in the Official Interpretations (commentary) to the regulation to provide greater clarity.