CFPB Outlines Proposed Changes To TRID Rule


In order to provide greater clarity and certainty for mortgage lenders, the Consumer Financial Protection Bureau (CFPB) is proposing updates to its Know Before You Owe mortgage disclosure rule, also known as the TILA-RESPA Integrated Disclosures (TRID) rule.

The proposed changes are outlined in a 293-page document that was released by the bureau on Friday. Comments due on or before Oct. 18. The proposal includes numerous clarifications and technical corrections related to certain aspects of the rule. It also adds certain new provisions, including new tolerances for calculating the total of payments.

Appearing on page five of the closing disclosure, the “total of payments” tells the borrower the total amount of money that they will have paid over the life of the mortgage by the time they completely pay it off (assuming they are on time with every payment). This total (which can often be a shocker for borrowers) includes principal, interest, mortgage insurance (if applicable) and loan costs.

As the bureau explains in a release, prior to the introduction of Know Before You Owe, “the total of payments disclosure was determined using the finance charge as part of the calculation.

“The Know Before You Owe mortgage disclosure rule changed the total of payments calculation so that it did not make specific use of the finance charge,” the bureau says in its release. “The bureau is now proposing to include tolerance provisions for the total of payments that parallel existing tolerances for the finance charge and disclosures affected by the finance charge. This change would make the treatment of the total of payments disclosure consistent with what it was prior to the Know Before You Owe mortgage disclosure rule.”

The proposed changes would also add a new section on housing assistance lending.

“The rule gave a partial exemption from disclosure requirements to certain housing assistance loans originated primarily by housing finance agencies,” the bureau says in its release. “The … proposed update would promote housing assistance lending by clarifying that recording fees and transfer taxes may be charged in connection with those transactions without losing eligibility for the partial exemption. The rule would also exclude recording fees and transfer taxes from the exemption’s limits on costs. Through the proposed update, more housing assistance loans would qualify for the partial exemption, which should encourage lenders to partner with housing finance agencies to make these loans.”

The bureau is proposing to expand the Know Before You Owe rule to so that it covers all cooperative units.

“Currently, the rule only covers transactions secured by real property, as defined under state law,” the bureau explains in its release. “Cooperatives are sometimes treated as personal property under state law and sometimes as real property. By including all cooperatives in the rule, the bureau would simplify compliance.”

The revised rule would also include a new section related to privacy and the sharing of borrower information.

“The bureau has received many questions about sharing the disclosures provided to consumers with third parties to the transaction, including the seller and real estate brokers,” the release states. “The bureau understands that it is usual, accepted, and appropriate for creditors and settlement agents to provide a closing disclosure to consumers, sellers, and their real estate brokers or other agents. The bureau is proposing additional commentary to clarify how a creditor may provide separate disclosure forms to the consumer and the seller.”

In a statement released immediately following the CFPB’s request for comments, David Stevens, president and CEO of the Mortgage Bankers Association, says the association “appreciates the CFPB’s efforts to update and clarify certain aspects of the Know Before You Owe rule.”

“This particular regulation has a big impact on both borrowers and lenders, so it’s important that the bureau and stakeholders continually reassess the implementation process to ensure its effectiveness,” Stevens says. “We look forward to commenting on the rule, and continuing to work with the CFPB to gain further clarity in order to improve this and other rules and regulations.”

In a separate statement, Rob Nichols, president and CEO of the American Bankers Association, adds, “This rule has enhanced consumer disclosure and protections, but also has created uncertainties and delays that affect product offerings and impose unintended costs on these same consumers. We share the CFPB’s goal of improving disclosures and the overall loan process.

“The Know Before You Owe rule was a massive undertaking, and these proposed changes begin the process of making needed adjustments and clarifications inherent in any large and complex rulemaking,” Nichols adds. “While we don’t anticipate that this proposal will address all of our concerns – and are certain others will arise – we do appreciate the good faith effort made by Director [Richard] Cordray and the CFPB to begin a process for ensuring an improved rule that will benefit all participants in the loan process. We will continue to work with our members and the Bureau on further necessary clarifications, adjustments and guidance that will allow us to better serve our customers.”

To view the full proposal, click here.

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