Answers to Frequently Asked TRID Questions

Dear Members,

There are several questions that keep popping up through the Help Desk and the CFPB Hotline. Therefore, I thought it would be helpful if I shared a couple of them with you this week, along with the answers (of course!).

Before we get to the questions and answers, however, I want to remind you that DoubleTime® 7.0.2 is available for download so that you can upgrade to the latest and greatest version of DoubleTime®. 7.0.2 addresses most of the issues you were experiencing with the balance sheet and also several other kinks. Here is a link to the website where you can get the information to install.

We want to hear from you! A week or so ago I sent out a TRID survey, looking for info about your experiences with the new rules. If you have not yet responded, please take the time to do so. It's not painful, I promise! Click here to take the survey.

Now for some commonly asked questions.

IS MY TRANSACTION COVERED BY TRID RULES?

Most consumer mortgage loan closings are covered. Exceptions include reverse mortgages, open-ended loans such as HELOCS, loans for business, commercial, or agricultural purposes, and loans made to other than natural persons. Let me state the obvious: cash deals are not covered by TRID. The Closing Disclosure is only required and is designed to be used for transactions which include a mortgage. Commercial transactions are exempt from its required use if the mortgage loan is "primarily" for business, commercial or agricultural purposes. Although there is no prohibition from using the Closing Disclosure for cash and commercial transactions, you may use any form you wish for those transactions including the custom settlement statements found in DoubleTime®, the new ALTA designed forms, or the original two-page HUD-1(1974 version).

WHAT CLOSING STATEMENTS CAN I PROVIDE TO THE REAL ESTATE BROKER AND OTHER THIRD PARTIES?

Unlike the HUD-1, the Closing Disclosure is created by the lender and the lender has ownership rights to it. For that reason, their approval is needed. In addition, since the Closing Disclosure contains far more Non-public Personal Information (NPI), caution should be exercised and borrower approval obtained before sharing it with others.

A better solution is to prepare a joint closing statement such as the ALTA statement or the custom settlement statements found in DoubleTime® and other closing software. The general sense is that these can be provided to real estate brokers without significant concern.

The TRID rules require that the settlement agent prepare and provide a Seller Closing Disclosure. There is no reason to give that to anyone other than the seller if you have prepared another joint closing statement but there is no NPI concern about the Seller Closing Disclosure.

THERE IS A FIRST AND A SECOND MORTGAGE IN MY TRANSACTION. CAN I SHOW BOTH MORTGAGES ON ONE CLOSING DISCLOSURE?

Lenders have the option of having the second loan disclosed on a separate document, or they can include it on the Closing Disclosure for the first mortgage. If shown on a separate document, it would not necessarily be on a Closing Disclosure. For example, because a HELOC is an "open-end" loan transaction, it could be disclosed using a HUD-1 type document or settlement statement. Only "closed-end" loan transactions are covered by the new rules and must use the Closing Disclosure unless they qualify for some other exemption.

If the lender wants to include everything on one Closing Disclosure, we believe the separate charges related to the second loan should be disclosed in "Section H. Other;" but the lender has the discretion to request itemization elsewhere.

WHERE SHOULD I DISCLOSURE THE FLORIDA POLICY SURCHARGE (CURRENTLY $3.28) ON THE CLOSING DISCLOSURE?

The policy surcharge required by Sec. 627.7865, F.S. is described in Sec. 631.401(2), F.S. as a "governmental assessment." As such it should be disclosed in "Section E. Taxes and Other Government Fees." There is no hard and fast rule as to how it should be described on the Closing Disclosure, but it must include the reference "State of Florida" as the payee following the word "to" on that line.

Since it is not a component of title insurance, it should never be preceded by "Title -".

NOTE: Lenders may have a different interpretation. Lender instructions should normally be followed since they are responsible for the content of the Closing Disclosure. We believe that if the lender asks for your assistance or advice, separately itemized in Section E would be the preferred placement.

That's all for this week. Hope your holidays are wonderful. As always, thank you for your support of The Fund.

Best Regards,

Melissa Jay Murphy
Senior Vice President and
General Counsel