Although we are still only a few months into the sea change in residential real estate closing documentation, the general consensus is that implementation of the TILA–RESPA Integrated Disclosure (“TRID”) has been relatively smooth. The deadline for implementation was extended following months of preparation and educational steps for realtors, brokers, and lenders; therefore, most industry participants were aware of the new forms and TRID requirements. However, some challenges have emerged for small institutions and market participants unaware of the nuances and exceptions for applying the TRID Rule. For certain types of loans, the prior good faith estimate and HUD-1 are still part of the process. The CFPB has indicated that consumers appreciate the new forms and find them easier to understand.
However, deeper investigation shows that high levels of errors pervade many of the forms, and private investors are highlighting problems with loans and rejecting them. Although Fannie Mae, Freddie Mac, HUD, and the CFPB itself have indicated they will offer some leniency as part of initial compliance efforts, the private plaintiffs’ bar is likely to assert TRID violations as soon as they arise, without any grace period for implementation. Loan originators and lenders should be aware of this consequence of noncompliance.
Recently, the CFPB made changes to the TRID Rule to correct a “typographical error” related to certain taxes, premiums, and fees and variations permitted for such charges. The corrected rule updates the provisions to explain that the referenced items/changes are not subject to tolerances whether or not they are placed into an escrow, impound, reserve, or similar accounts.
Should your institution have questions or concerns regarding the TRID Rule, please contact Spilman Thomas & Battle, PLLC.