TRID Amendments – Tolerances, Expiration of Loan Estimates and Updated Forms Guide; Zoolights!

Written by Brandy Bruyere, Vice President of Regulatory Compliance

Once in a while, our blog schedule is updated and I blog twice in a row. We ended last week with HMDA, and we'll start the week off with TRID.

Tolerances

TRID requires credit unions to provide a Loan Estimate in good faith and based on the best information reasonably available, with certain costs being subject to zero tolerance, 10 percent tolerance or no tolerance. Some of the 2017 amendments incorporate past guidance or imperfect attempts to fix errors in the rules relating to tolerances. For example, in February 2016, the CFPB amended the preamble to TRID to correct a mistake regarding which fees are subject to no tolerance, and now the 2017 rule formally incorporate this change. This clarifies that property taxes, homeowner's association dues, condominium fees and cooperative fees are subject to no tolerance when the figures on the Loan Estimate are based on the best information reasonably available. This chart summarizes the tolerance categories as tweaked by the TRID amendments:

	TRID Tolerances for Settlement Costs
Zero tolerance	·   All other fees which are not either 10% tolerance or subject to no tolerance. Examples include: -   Fees paid to the credit union, mortgage broker, or an affiliate of either -   Any fees paid to any party if the member was not permitted to shop -   Transfer taxes
10% tolerance	·   Recording fees ·   Fees paid to unaffiliated 3rd-party  when the member is permitted to shop (examples could include settlement agent fees, notary fees)
No tolerance limitation	·   The following IF the estimate was “consistent with the best information reasonably available”* to the credit union at the time of disclosure -   Prepaid interest -   Property taxes -   Property insurance premiums -   Homeowner's association fees -   Condominium fees -   Cooperative fees -   Amounts placed into an escrow or similar account -   Charges paid to 3rd-party service providers selected by the member that are NOT on a list provided by the credit union -   Charges paid for 3rd-party services NOT required by the credit union, including charges to affiliates *Note, estimates cannot be unreasonably low in order to meet this standard

The CFPB also added commentary to clarify that the 10 percent tolerance applies in the aggregate as opposed to a specific charge. For example, if a fee subject to 10 percent tolerance was left out of the Loan Estimate, it could be on the Closing Disclosure (and charged to the borrower) so long as the aggregate amount of fees does not exceed ten percent of the amount shown on the Loan Estimate. The CFPB provided an example in comment 19(e)(3)(ii)-2:

1. Assume that, [in the Loan Estimate], the creditor includes a $300 estimated fee for a settlement agent, the settlement agent fee is included in the category of charges subject to [10 percent tolerance], and the sum of all charges subject to [10 percent tolerance] (including the settlement agent fee) equals $1,000. In this case, the creditor does not violate [tolerance limitations] if the actual settlement agent fee exceeds the estimated settlement agent fee by more than 10 percent (i.e., the fee exceeds $330), provided that the sum of all such actual charges does not exceed the sum of all such estimated charges by more than 10 percent (i.e., the sum of all such charges does not exceed $1,100).

Expiration of the Loan Estimates.

Section 1026.19(e)(3)(iv)(E) allows credit unions to revise charges originally disclosed on the Loan Estimate if the consumer indicates an intent to proceed with the loan more than ten business days after receiving the Loan Estimate. There was uncertainty under TRID as to whether the credit union could voluntarily extend this ten business day window. The amended rule clarifies that credit unions may do this. However, the consumer must be permitted to rely on the Loan Estimate and to indicate their intent to proceed within the specified window of time. For example, if a credit union decides to extend the expiration date for a total of 14 business days, then the member must be allowed to indicate their intent to proceed under the terms in the Loan Estimate such as the disclosed rate.

Updated Forms Guide.

Finally, last week the CFPB updated its TRID Guide to Forms to incorporate the 2017 changes to TRID. Updates include:

• The Loan Estimate in the General Requirements, General Information, Loan Terms, Projected Payments table, Costs at Closing, Loan Costs and Other Costs, Calculating Cash to Close table, Alternative Calculating Cash to Close table, Comparisons, and Confirm Receipt.
• The Closing Disclosure in the General Requirements, General Information, Costs at Closing table, Other Costs, Calculating Cash to Close table, Summaries of Transactions, Borrower’s Transaction, Seller’s Transaction, Escrow Account, Loan Calculations, and Confirm Receipt.  
• Coverage of closed-end credit transactions secured by a cooperative unit in various sections of the guide.

Palate Cleanser. Since I started the week off with TRID, I thought I'd share a photo of Nolan at Zoolights. He was a big fan of the train!