line over the other or prohibit the use of one line over the other. However,
given the “adjustments” title prior to lines K5-7, it seems these lines should
be limited to contractual adjustments between borrower and seller and
principal reductions should be disclosed on line K4. Confirm with your
compliance team and documentation provider how your organization
will handle the principal reduction disclosure.
Revised Disclosures: TRID 2.0 addresses both revised Loan Estimates and
revised Closing Disclosures. With respect to the Loan Estimate, if you issue a
revision after the consumer indicates an intent to proceed with the transaction, you do not need to complete the expiration of closing costs date and
time fields on that revised Loan Estimate.
In addition, TRID 2.0 makes clear that a revised estimate may be provided
merely for informational purposes versus a revised estimate used to reset fee
tolerances. Note, however, that any revised Loan Estimate—whether to reset
tolerances or for informational purposes—must update all fee disclosures
using the best information reasonably available.
On the Closing Disclosure side, if the Closing Disclosure becomes inaccurate post‐closing, and the only reason for the inaccuracy is due to per
diem interest, then a corrected Closing Disclosure is not
required. If the Closing
Disclosure is inaccurate
post‐closing for reasons
other than the per diem
interest, and the per
diem interest is likewise
inaccurate, then the per
diem must be accurately
disclosed on the corrected
Finally, in addition to
TRID 2.0, the bureau issued a final rule closing the “Black Hole” when using a Closing Disclosure to reset fees. Here’s the scenario: Once the initial
Closing Disclosure has been issued, a revised Loan Estimate can’t be issued.
The Closing Disclosure may be used to reset tolerances. However, the revision of fees must be done within three business days of learning of the event
that triggered the revision. Furthermore, a disclosure that revises fees must
be provided no later than four business days prior to consummation. The
“black hole” is the gap between the end of the three business days period
after learning of a change event, and the start of the four business days period
prior to consummation. To make a long story short, the “Black Hole” final
rule removes the four business days prior to consummation limitation when
using a Closing Disclosure to reset tolerances.
✔ ✔ Risk Management Consideration: If you provide an informational revised Loan Estimate, ensure that the entire revised estimate is updated.
Also monitor change events and the impact on fees carefully. Ensure staff
understands that a Closing Disclosure may be used to reset tolerances
without regard to the four business days prior to consummation limitation. Resetting tolerances where permitted can help avoid implementing
cure provisions and potential Regulation Z violations.
On the Horizon
While TRID 2.0 provided a fairly good clean-up of TRID 1.0, areas of un-
certainty and contention remain. At the top of the list are construction loans.
TRID 2.0 does provide much needed guidance regarding how to disclose a
construction loan, including updates to Appendix D and a section dedicated to
compliance in the Small Entity Guide. However, many in the industry continue
to struggle with disclosure of such loans. Lenders are asking the CFPB for an
exemption from TRID requirements for single-family residential construction
loans. Citing consumer confusion and disclosure burden that is forcing many
lenders out of the construction loan market, the industry is asking that at a
minimum, the bureau reduce liability enforcement. From there, lenders hope
the bureau would consider adopting a more streamlined disclosure process
whereby lenders can disclose basic information using a format of their choosing.
Along the lines of enforcement, the industry is also asking that the CFPB
expand the ability to cure minor TRID errors. While TRID does provide
measures for revising fees and resetting tolerances, many believe provisions
to “fix” a problem are too burdensome and complex and must be simplified.
The industry is also requesting an amendment that would extend the time to
cure a violation after consummation. Such an extension would provide lenders
more time to carefully review loan documentation post-consummation and
make necessary corrections and refunds. While the bureau may consider
such requests, there is regulatory concern that additional cure provisions
could reduce the incentive to comply with the TRID rule.
Needless to say, the industry hasn’t heard the last word on TRID as compliance requirements and expectations will continue to evolve. There is talk
of repealing the Dodd-Frank Act altogether and thereby repealing TRID.
Despite the new administration and a change in the bureau’s leadership, this
might be wishful thinking at best. Institutions have dedicated significant
resources toward TRID compliance, and who knows what might take its
place if it were repealed. In the meantime, organizations should understand
that compliance implementation is an ongoing process requiring continuous document review, policy and procedure audit and staff training. And
despite political rumblings, institutions must stay the course and carefully
manage TRID compliance and risk. ■
ABOUT THE AUTHOR
SUE BURT is a senior compliance consulting specialist with Wolters Kluwer.
Her thorough knowledge of the bank regulatory environment is based on more
than 30 years of industry experience. In her role with Wolters Kluwer, Burt
uses her expertise to assist financial institutions in addressing compliance and
other operational risk management issues.
1 The CFPB has been in a slow process of rebranding itself, and ABA will begin using
“Bureau of Consumer Financial Protection” and “BCFP” when either ( 1) the Associated
Press stylebook changes, or ( 2) the bureau updates its website to reflect the different
name. As of this edition’s printing, the bureau’s website still says “Consumer Financial
Protection Bureau” and “CFPB.” ABA made this decision in April 2018 to minimize
confusion for readers who may be more familiar with the CFPB name.