On January 25, the Consumer Financial Protection Bureau posted a list of four frequently asked questions, or “FAQs,” clarifying some aspects of the TILA-RESPA Integrated Disclosure Rule (“TRID Rule”).
The TRID Rule, which applies to many consumer mortgage loans, consolidated the various disclosure forms that were required under the Truth in Lending Act (“TILA”) and the Real Estate Settlement Procedures Act (“RESPA”) into two forms: (1) a Loan Estimate that must be given to a borrower by the third business day after the lender receives an application; and (2) a Closing Disclosure that must be given at least three business days before consummation.
The first three FAQs seek to clarify a lender’s obligations if there is a change to the disclosed loan terms after the Closing Disclosure has already been given to the consumer. They explain that unless the change falls into three specific categories, the lender can provide a corrected Closing Disclosure at or before the scheduled closing without having to push the closing out an additional three business days. However, if the change (i) results in the APR becoming inaccurate, (ii) results in inaccuracies in the loan product information required by the TRID Rule, or (iii) adds a prepayment penalty to the loan, the corrected Closing Disclosure must be given at least three business days before consummation. Thus, these FAQs confirm that material changes to the loan terms after a Closing Disclosure has already been given may require a closing to be rescheduled in order to comply with the TRID Rule’s three–business–day requirement.
The fourth FAQ confirms that a lender who uses the CFPB’s most current model forms and properly completes them with accurate content will be deemed in compliance with the regulatory requirements. This “safe harbor” applies even if the model forms have not yet been updated by the CFPB to reflect recent rules and regulations.
Despite this attempt to resolve some of the gray areas in the regulations, mortgage lenders still should exercise caution before relying on these FAQs. As the FAQs expressly note, they are not a substitute for reviewing the applicable laws and regulations, nor do they have the weight of a law or an officially promulgated agency interpretation. Lenders should always consult legal counsel if they have any questions or concerns about the extent of their obligations under the TRID Rule or any other federal regulations.