Compliance: CFPB publishes TRID FAQs on disclosures, model forms
The Consumer Financial Protection Bureau (CFPB) issued an updated frequently asked questions document in late January for its Truth in Lending Act-Real Estate Settlement Procedures Act integrated disclosure (TRID) rule. The questions cover the timing of the Closing Disclosure requirement and use of model forms.
The first question asks if a creditor is required to ensure the consumer received a corrected Closing Disclosure at least three days before consummation when there is a change to the disclosed terms after the initial Closing Disclosure is provided.
The bureau says this is not required in most instances, but creditors are required to ensure that the consumer receives a corrected Closing Disclosure at or before consummation.
Consumers are required to receive the corrected disclosure at least 3 days in advance if:
- The change results in the APR becoming inaccurate;
- The loan product information required to be disclosed under the rule becomes inaccurate; and
- A prepayment penalty has been added to the loan.
Any of the above three changes trigger a new three-business-day waiting period.
The second question asks whether a creditor must ensure that a consumer receives a corrected Closing Disclosure at least three business days before consummation if the APR decreases.
The answer on whether the previously disclosed APR is accurate or inaccurate according to the Regulation Z definition, that is, if the difference between the disclosed APR and the actual APR for the loan is within an applicable tolerance in Regulation Z.
The regulation includes several tolerances that might apply for transactions secured by real property or a dwelling.
If the overstated APR is inaccurate under Regulation Z, the creditor must ensure that a consumer receives a corrected Closing Disclosure at least three business days before the loan’s consummation.
The third question is whether a section of the Economic Growth, Regulatory Reform and Consumer Protection Act (S. 2155) affects the timing for consummating a transaction if a creditor is required to provide a corrected Closing Disclosure under TRID.
Section 109(a) of S. 2155 amends Section 129(b) of the Truth in Lending Act (TILA), which governs when certain disclosures must be provided for high-cost mortgages and the waiting periods for consummating a transaction after the creditor has provided those high cost mortgage disclosures.
The answer to this question is no, S.2155 does not change the timing for consummating transactions if the creditor is required to provide a corrected Closing Disclosure.
The fourth question asks if a creditor is provided safe harbor if they use a model form that does not reflect the 2017 change in the TRID rule.
According to the CFPB, “a creditor is deemed to be in compliance with the disclosure requirements associated with the Loan Estimate and Closing Disclosure if the creditor uses the appropriate model form and properly completes it with accurate content.”
Additional details on the updated resource can be found on CUNA’s CompBlog.