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All in TRID
In this Compliance Clip (video), Adam explains what NMLS should go on the Closing Disclosure when one lender issued the Loan Estimate, but a different loan officer is now assigned to the loan. This situation can be tricky for financial institutions that don’t have much turnover with their lending staff. Fortunately, Adam busts out some commentary to guide the way on how to comply.
Adam uses this Compliance Clip (video) to discuss what to do in situations where applications containing the six pieces of information (constituting an application under TRID) are located on an online application system, but the borrower never hits the “submit” button, so a Loan Estimate doesn’t go out to the applicant within 3 days of collecting this information (if ever). In other words, Adam answers the question of whether collecting the six pieces of information in an online application where the borrower doesn’t submit the application constitutes a received application under TRID, requiring an LE?
The CFPB has again updated the TRID FAQs on their website. This update incorporates five new questions and answers relating to providing loan estimates to consumers. As has been the case with the previously released FAQs, these five new questions don’t really tell us anything we didn’t already know. That said, we will be including a review of these FAQs in our 3Q 2019 Quarterly Compliance Update program (planned to be released sometime in October 2019.
On May 31, 2019, the CFPB updated their list of Frequently Asked Questions (FAQs) relating to the TRID rules. This update, the first since the release of the FAQs in early 2019, added two questions and answers relating to construction loans. As we previously explained when the FAQs were first released, these two FAQs really don’t…
On May 1, 2019, the CFPB issued a Fact Sheet discussing TRID applicability for assumptions. This six-page document answers the question of whether Loan Estimates (LEs) and Closing Disclosures (CDs) are required for assumptions and contains two main parts: 1) a flowchart and 2) a narrative discussion. The flowchart is a quick reference that highlights the major questions to be answered when determining if a Loan Estimate and Closing Disclosure are required for the assumption transactions described above. The narrative discussion provides general information that may be useful when determining if a Loan Estimate and Closing Disclosure are required, including information related to each of the major questions set forth in the flowchart.
As you would expect
For years now, I have been advocating that there is only one reason why a revised Loan Estimate must absolutely be issued: when an initially floating rate is subsequently locked.
Sure, there are other reasons a financial institution can issue a revised loan estimate, such as when there is a valid changed circumstance, but the only time a revised Loan Estimate is absolutely required is when an initially floating rate is subsequently locked.
While this reason for a revised loan estimate may seem simple, there are actually some questions that arise with the requirement to provide a revised Loan Estimate from a rate lock. For example, you may be asking one of the following questions:
Is a written rate lock agreement required for the revised Loan Estimate trigger?
Is a revised Loan Estimate required after a rate expiration or for a rate extension?
Is a revised Loan Estimate required when a rate is locked after a Closing Disclosure has been issued?
Is a revised Closing Disclosure required when a rate is locked after a Closing Disclosure has been issued?
I have spent a bit of time studying comedy. I’m no expert by any means, but I’m always intrigued by the details of how things work, and comedy is no exception. I figure that once I understand how something like comedy works, I will be able to better use it and appreciate it.
When we look at the art of comedy, there is one well-known element that seems to be….
(Click here to see how this post relates to the new TRID FAQs - and we promise it does!)
Though estimate tolerance rules have been around before TRID, “good faith,” tolerances, and refunds/cures seem to still be a challenge for many lenders and creditors. This is concerning as tolerances/cures are one of the higher-risk areas (like rescission) that creditors really need to ensure they are doing appropriately as deficiencies can result in significant fines, penalties, and enforcement actions.
In reviewing the challenges related to calculating “good faith” and providing appropriate refunds/cures, it appears that there still seems to be quite a bit of confusion relating to how a creditor must calculate tolerances in the 10% tolerance bucket.
The changes made by TRID 2.0 were interesting. On one hand, a few things made significant changes to the way we have always done things. On the other hand, however, the majority of changes were fairly minor in nature or didn’t seem to affect the majority of financial institutions. One question we have received a few times relates to the new TRID 2.0 rules for total of payment tolerances. When TRID 2.0 was first announced, this seemed to be one of biggest changes included in the rules. Now that TRID 2.0 is in affect, however, some may be wondering what all of the fuss was about relating to the TRID 2.0 tolerances for total of payments.
One of the significant changes in TRID 2.0 relates to how the “best information reasonably available” can affect calculating good faith and, ultimately, reimbursements. Under Regulation Z, creditors are required to disclose fees that are anticipated for a loan transaction in “good faith.” Good faith depends on a number of factors (such as the type of fee and whether the fee goes to the creditor or their affiliate) and basically is calculated in one of three “buckets” as follows: The zero tolerance bucket, the 10% bucket, and the unlimited bucket. While these tolerance “buckets” have been around for since the inception of TRID, TRID 2.0 has placed an even greater emphasis on disclosing fees based on the best information reasonably available.
