Pub. 7 2017-2018 Issue 3

8 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S Do We Finally Have a Better TRID? BY VICTORIA E. STEPHEN, ASSOCIATE GENERAL COUNSEL, COMPLIANCE ALLIANCE O n July 7th the CFPB finally is- sued its much-anticipated final rule amending various parts of the TILA-RESPA Integrated Disclosure Rule. Clocking in at 560 pages, the final rule clarifies a variety of issues that have been thorns in the sides of lenders across the country for two years now, but it also leaves much to be desired. The final rule is effective October 1, 2017 but compliance isn’tmandatory until October 1, 2018. During this year-long optional compliance period, the bank can comply with the changes all at once or phase in the changes one at a time, even within the course of a single transaction. Despite thisflexibility, thebankcannot phase in certain parts of the final rule in a way that would violate existing rules, though. For example, the bank can’t provide a Good Faith Estimate followed by a Closing Disclosure for a transaction secured by a cooperative unit because the current rule requires that disclosures on the LoanEstimate also be included on the Closing Disclosure. Tolerances for the total of payments The first of the substantive changes is the addition of a tolerance provision to the Total of Payments that parallels the finance charge tolerance. Generally, the Total of Payments disclosure will be considered accurate if it is understated by nomore than $100 or overstated at all, although this varies some based on the type and status of the loan. Privacy and sharing of information The CFPB noted that “it is usual, ac- cepted, and appropriate” for the Closing Disclosure to be provided not only to consumers and sellers, but also their real estate brokers and other agents. The new rule clarifies that the bank may provide separate disclosures to a borrower and seller if state law prohibits sharing this information, as well as in any other situ- ation where the bank chooses to provide separate disclosures. Cooperatives This change is probably the most straightforward. Cooperative units will now be subject to TRID regardless of whether they are considered real prop- erty under state law. If you recall, TRID applies if a loan meets three basic tests: 1. consumer purpose; 2. closed end; and 3. secured by real estate (other than reverse mortgages). The problem is that TRID itself doesn’t define real property; rather, state lawdoes.With this change, theCFPB sought to create a uniform rule to avoid “uncertainty andpotential inconsistency” in providing disclosures for cooperatives. Housing assistance lending Regulation Z provides an exemption fromtheTRIDrequirements for low-cost, non-interest bearing, subordinate-lien housing assistance loans that satisfy six criteria, andRegulationXprovides a sim- ilar exemption. One of the criteria limits the costs thatmay be paidby the borrower without loss of eligibility for the partial exemption, and the final rule broadens these costs. Transfer taxes, recording fees, application fees, and housing counseling feesmaynowbe paidby the borrower, and recording fees and transfer taxes are also excluded from the 1-percent cap on total costs payable by the borrower. Further, it hadn’t been clear whether the lender was allowed to provide TRID disclosures even if the six criteria of the exemption had been met. The new rule generally says the answer is yes. Assuming the loan meets the six criteria, the lender may provide either the general TIL dis- closures or a compliant LE and CD, and