The Consumer Financial Protection Bureau finally issued their long-awaited updates the “Know Before You Owe” rule (better known to lenders as TRID) on Friday, July 7th. The big news is not so much of what CFPB said, but more so in what was not said.
CFPB addressed some areas that needed clarification. But, noticeably they side-stepped two of the main issues now causing concern and confusion.
- What has become known in the industry as the ‘Black Hole”; and
- The disclosure of Title Insurance costs.
CFPB did provide additional guidance in 4 specific areas. These are:
- Tolerance limits for total payments (bring them in line with APR finance charges tolerances).
- Housing Assistance Lending – allow transfer taxes and recording fees to be charged in connection with a first loan, without losing the disclosure exemption for the assistance loan.
- Cooperatives – Clarification that all Cooperative mortgage loans are included under TRID.
- Sharing of Information – CFPB is finalizing new commentary on how a lender may provide separate disclosure forms to all parties to a transaction.
You can read more information about these updates in the CFPB News Release.
As you should know by now, under the current rule the only way a bona fide fee increase may be charged, after issuance of the initial CD, is if there is insufficient time to issue a revised Loan Estimate; that would be 3 business days after learning of the change necessitating the increase.
The current rule does not allow for the issuance of a revised Loan Estimate once the initial Closing disclosure is issued. For now, we’ll have to wait on a final decision from CFPB on the handling of the disclosure and collection of increased fees after issuance of the initial CD when the closing gets delayed allowing for sufficient time to issue a revised Loan Estimate.
To this point, CFPB has issued a new proposal for comment on how a justifiable fee increase can be reported and collected after issuance of the initial CD when the closing is delayed. You can read that proposal HERE.
Unfortunately, it seems that CFPB is not going to address the issue of how the Owner’s and Lender’s Title Insurance coverage must be disclosed to the consumer.
Maybe it would be simpler for the title industry to come up with a combined owner’s policy, naming the lender as an additional insured, like homeowners. That way there would only be one premium to disclose, eliminating the confusion.
So, for now, we got some clarification. Unfortunately, they added no clarity on the hot items. But, there is still an opportunity for additional comments.
Take a look at the new proposal for the handling of the “Black Hole”. This one is key, as it will allow lenders to collect bona fide fee increases after issuance of the initial CD. That will avoid unnecessary losses.