The Bureau of Consumer Financial Protection (CFPB) has finalized its July 2017 proposed amendments to the Truth in Lending Act/Real Estate Settlement Procedures Act integrated disclosure (TRID) rule.
The amendments are designed to address the TRID “black hole,” which occurs when the lender has provided a borrower with the Closing Disclosure, and then a fee increase occurs.
Currently, a creditor may only use a Closing Disclosure to reset tolerances if there are fewer than four business days between the time the creditor is required to provide the Closing Disclosure reflecting the revised estimate and consummation.
Credit unions and other creditors can often be forced to absorb these increased costs that would otherwise be rightfully passed on to the member but for the four-day limit rule.
The finalized amendments address these issues by specifically providing that creditors may use the Closing Disclosures to reflect changes in costs for purposes of determining if an estimated closing cost was disclosed in good faith, without the four-day limit.
The rule will become effective 30 days after its publication in the Federal Register, which is expected in the coming days.
Once effective, if a changed circumstance or another triggering event has occurred, a creditor can reset tolerances with either an initial or corrected Closing Disclosure reflecting the revised estimate is required to be provided to the consumer.
However, the four-day limit remains in effect for revised Loan Estimates.
A detailed look at these changes can be found on CUNA’s CompBlog.