Wednesday, May 30, 2018

Six Compliance Topics from Lenders about TRID

Over time TRID has settled in to a routine set of policies and procedures. Even so, some questions persist, and we are in a good position to know about these topics because we get inquiries from our many clients. Because of our clients’ inquiries, we are able often to know what regulatory compliance issues are most important in the loan origination and servicing processes. Our experts respond case-by-case, but the overall research is shared, as needed, with our clientele. Our collection of research is huge and we offer our knowledge, experience, and expertise to our clients in order to ensure that they receive the very best guidance – a commitment that Lenders Compliance Group is recognized for keeping!

In this outline, we provide six topics that have been raised several times over the last few years.

1. The Basics: Loans Subject to 12 CFR 1026.19(e) and (f)
The TRID rule consolidates four previous disclosures required under TILA and RESPA for closed-end credit transactions secured by real property into two forms:

-a Loan Estimate that must be delivered or placed in the mail no later than the third business day after receiving the consumer’s application, and

-a Closing Disclosure that must be provided to the consumer at least three business days prior to consummation.

The new disclosures apply to most closed-end consumer credit transactions secured by real property.

Credit extended to certain trusts for tax or estate planning purposes is not exempt from the TILA-RESPA rule.

However, some specific categories of loans are excluded from the rule. Specifically, the rule does not apply to home equity lines of credit (HELOCs), reverse mortgages, or mortgages secured by a mobile home or by a dwelling that is not attached to real property (i.e., land).

You may not use the new disclosures on applications received before August 1, 2015, and you may not use them after August 1, 2015, on loans listed above that are exempt. Therefore, you cannot use them on reverse mortgages or on loans for mobile homes not attached to real property.

You must use existing forms and follow the rules in 12 CFR 1026.18.

2. Timing for Delivery of the Loan Estimate
Generally, the creditor is responsible for ensuring that it delivers or places in the mail the Loan Estimate form no later than the third business day after receiving the consumer’s application and seven business days before the consummation of the loan.

If a mortgage broker receives a consumer’s application, the mortgage broker may provide the Loan Estimate to the consumer on the creditor’s behalf. [12 CFR 1026.19(e)(1)(ii)]

If the broker provides the Loan Estimate, it satisfies your obligation; however, you are still responsible for any errors or defects, and so third-party provider management is crucial.