CFPB/TRID Update

Highlights of the TRID amendments finalized by the CFPB

Dear Members,

How is your summer going? It’s hard to believe it is August already. Besides being General Counsel, I recently became a condominium unit owner and my friends have not hesitated to give me advice about staying OFF the board of directors, sitting in the back of the room at owner meetings, and staying under the radar of the management company. I finished up Season 5 of House of Cards and started watching Ozark. Alabama football is ranked #1. Ho hum. The sports "talking heads" are saying a lot about the Florida vs. Michigan opener so I am looking forward to that game. But enough about me. What can I tell you that will be helpful?

CFPB/TRID

Update You might recall that CFPB proposed various amendments to the TRID rules – or maybe not. It was quite a while ago. But on July 6, the CFPB announced the final TRID rule amendments. There are no real surprises here and most Members will not notice anything different once the rules kick in. But, because inquiring minds want to know, here are the highlights:

There are no changes to the TRID rules related to disclosure of title insurance premiums. TRID’s curious formula, as you know, assigns the lion’s share of the total premium to the loan policy. For this reason, we continue to strongly recommend use of the ALTA Settlement Statement forms to accurately disclose premium.

You may experience a renewed demand from Realtors for copies of the CD. The CFPB used up a lot of ink in that regard, but the “sharing rules” did not change. Lenders will continue to have the unrestricted ability to prohibit settlement agents from sharing the form. This is another reason why the ALTA Settlement Statement is so useful.

The rules have loosened up regarding the exemption for housing assistance loans, so you may encounter more of them where use of a CD will NOT be required. Remember though, lenders are allowed to use a CD for any loan and not just the ones where its use is required.

The amendment addressed a glitch in the tolerance cure requirements and opened the door to a new option for lenders to use when the opportunity arises. Currently, lenders must reimburse the borrowers in cash. Now, however, lenders will be allowed to provide the cure in the form of a principal reduction and disclose it on the CD. This ability will not be restricted to those loans where cash back is prohibited as originally proposed.

Members who represent lenders should take note of a few things which may affect them:

Cooperative units will now be included in the scope of coveragethe exemption where state law considers them to be personal property has been eliminated.Greater guidance is given to the disclosure of costs related to construction loans, in particular where the lender can or will provide permanent financing.The “black hole” which limits the ability of lenders to provide revised estimates based upon valid changed circumstances has not been closed; instead it is now the subject of a newly proposed amendment.

Perhaps the greatest confusion with the amendments is the effective date. With a few exceptions, lenders may begin to apply the new rules beginning 60 days after publication in the Federal Register which is yet to happen. Lenders must abide by the amended rules no later than October 1, 2018. Until then members may experience some lenders implementing the new rules while others do not.

Thank you for sending examples of how the estoppel certificate process and charges may have changed since the effective date of the changes (July 1, 2017). Keep ‘em coming.

Let me know how we can help you.

Best Regards,
Melissa Jay Murphy
Senior Vice President and General Counsel