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Turning Regulations into PLAIN ENGLISH!
TRID: Changed Circumstances &
Revised Disclosures
November 14, 2018
Table of Contents
* Words in Italics are taken directly from the applicable regulations.
TRID ................................................................................................................................
I. “Good Faith” Tolerances ..................................................................................... 1
II. Revising the Loan Estimate ................................................................................. 4
The “Good Faith” Effect* on Revised Loan Estimates ......................................... 5
III. Revising the Closing Disclosure ........................................................................ 10
This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. The information contained within this manual pertains to federal regulations. Banker's Compliance Consulting makes every attempt to understand applicable state laws as well; however, this information may not be represented in this manual. If you are aware of state laws that conflict with information presented in this manual, please contact Banker's Compliance Consulting. This publication contains the author’s opinion on the subject. All rights reserved. This manual may not be reproduced in whole or in part in any form whatsoever without permission from the publisher. The publisher hereby specifically disclaims any personal liability for loss or risk incurred as a consequence of the advice or information presented in this book.
Copyright © 1997 – 2018All rights reserved. Printed in the United States of America
Banker’s Compliance Consulting PO Box 87
Central City, Nebraska 68826 [email protected]
800-847-1653
Banker’s Compliance Consulting 1 1-800-847-1653
TRID Regulation Z – 12 CFR 1026
Regulation X – 12 CFR 1024
I. “Good Faith” Tolerances: The Loan Estimate …must be provided in good faith. …if any information necessary for an accurate disclosure is unknown to the creditor, the creditor shall make the disclosure based on the best information reasonably available to the creditor at the time the disclosure is provided to the consumer. The “reasonably available” standard requires that the creditor, acting in good faith, exercise due diligence in obtaining information. [Commentary to §1026.19(e)(1)(i) #1]
Generally, an estimated closing cost will be considered to be “in good faith” if the actual final amount paid (unrounded) by the consumer on final Closing Disclosure does not exceed the amount (unrounded) indicated on the final (i.e., due to changed circumstances) Loan Estimate Disclosure (i.e., zero tolerance). [§1026.19(e)(3) and Commentary to §1026.19(e)(3)]
A. Zero Tolerance:
Unless otherwise specified the following fees (not necessarily all inclusive) cannot increase:
1. Lender or Broker Fees
2. Lender or Broker Credits
3. Investor Fees
4. Affiliate (Lender or Broker) Fees:
Any fee paid to another who is owned, controlled or can be voted upon in a capacity meeting or exceeding 25% (also includes a controlling interest in the election of directors).
5. Transfer Taxes
6. Third Party Service Provider Fees (Lender or Broker Required)
Where the consumer is not allowed to shop for a provider. For example (illustrative only):
a. Credit Report
b. Flood Determination
c. Appraisal
d. Title Services
Banker’s Compliance Consulting 2 1-800-847-1653
TRID
B. 10% Tolerance: [§1026.19(e)(3)(ii)]
The cumulative total of actual fees for applicable third-party services required by the bank and government recording fees disclosed on the Closing Disclosure cannot exceed the corresponding Loan Estimate Disclosure cumulative total by more than 10%. Included are:
1. Unaffiliated Third Party Service Provider Fees (Lender or Broker Required):
The applicant is allowed to shop for the provider of a third party service require by the bank. Whether or not the applicant was allowed to “shop” in relation to the determination of the cumulative 10% tolerance is based upon all relevant facts and circumstances. For example:
a. Shopping List:
Non-compliance with TRID shopping list requirements* is not an absolute determining factor. For example if you forgot to provide the shopping list or failed to provide a provider on the shopping list. If you can demonstrate that the applicant was allowed to shop, the fee related to that service could be included within the cumulative 10% tolerance. [Commentary to §1026.19(e)(3)(iii) #2]
b. Loan Estimate:
Non-compliance with TRID Loan Estimate section C disclosure requirements* is not an absolute determining factor. For example, if a service was omitted from section C of the Loan Estimate but changed at consummation. If you can demonstrate that the applicant was allowed to shop, the fee related to that service could be included within the cumulative 10% tolerance. [Commentary to §1026.19(e)(3)(ii) #2]
*Note: However, non-compliance as noted above is still a violation with respect to the Shopping List and or Loan Estimate requirements.
2. Government Recording Fees
Banker’s Compliance Consulting 3 1-800-847-1653
TRID
C. Unlimited Tolerance: [§1026.19(e)(3)(iii)]
Some charges may exceed the amounts disclosed (even if paid to an affiliate) on the Loan Estimate if the estimate was based upon the best information available to the creditor at the time it was disclosed. Those charges include:
1. Prepaid (Odd Days) Interest
2. Property Insurance Premiums:
All property insurance premiums (i.e., hazard, flood, etc.), required or not, are subject to an unlimited tolerance. However, the lender does not comply with the “good faith” requirement if property insurance is required but not disclosed.
The rule provides that property insurance premiums are included in the category of settlement charges not subject to a tolerance, whether or not the insurance provider is a lender affiliate. [Federal Register 12/31/13 page 79829]
3. Escrow Deposit
4. Third-Party Service Provider Fees (Lender or Broker Required):
If the consumer was allowed to shop and selected a provider not included on the shopping list.
5. Voluntary Third-Party Services:
Charges for third-party services not required by the lender. However, it’s not absolute. For example, if the consumer informs the creditor that the consumer will obtain a type of inspection not required by the creditor, the creditor must include the charge for that item in the disclosures provided… but the actual amount of the inspection fee need not be compared to the original estimate for the inspection fee to perform the good faith analysis… [Commentary to §1026.19(e)(3)(iii) #3]
But,…if the subject property is located in a jurisdiction where consumers are customarily represented at closing by their own attorney, even though it is not a requirement, and the creditor fails to include a fee for the consumer’s attorney, or includes an unreasonably low estimate for such fee, on the original estimates provided… then the creditor’s failure to disclose, or unreasonably low estimation, does not comply… [Commentary to §1026.19(e)(3)(iii) #3]
6. Property Taxes:
Additionally, …if the creditor fails to include a charge for property taxes, or includes an unreasonably low estimate for that charge, on the original estimates provided…then the creditor’s failure to disclose, or unreasonably low estimation, does not comply… [Commentary to §1026.19(e)(3)(iii) #3]
D. Service Not Utilized:
If the estimated fee for a service was included on the Loan Estimate Disclosure but ultimately the service was not used, the estimated fee for that service cannot be included within the tolerance calculations. [Commentary to §1026.19(e)(3)(ii) #5]
Banker’s Compliance Consulting 4 1-800-847-1653
TRID
II. Revising the Loan Estimate:
A. Tolerance Reset Loan Estimate Re-Disclosure:
A revised Loan Estimate (for comparison/tolerance purposes) may only be provided in connection with a valid changed circumstance. [§1026.19(e)(3)(iv) and Commentary to §1026.19(e)(3)(iv)]
B. Information Only Loan Estimate Re-disclosure:
A lender may issue a revised Loan Estimate Disclosure …for informational purposes, e.g., to keep the consumer apprised of updated information, even if the revised disclosures may not be used for purposes of determining good faith… For example a lender could issue …revised disclosures even though the sum of all costs subject to the 10 percent tolerance category has not increased by more than 10 percent. However, the revised disclosure cannot be used to determine either the 0% or 10% tolerances. [Commentary to §1026.19(e)(3)(iv) #4]
C. Revised Loan Estimates and the “Good Faith” Requirement:
Any revised disclosure (to reset tolerances and/or for informational purposes) issued …must be based on the best information reasonably available to the creditor at the time they are provided to the consumer… For example, if the creditor issues revised disclosures reflecting a new rate lock extension fee… other charges unrelated to the rate lock extension must be reflected on the revised disclosures based on the best information reasonably available to the creditor at the time the revised disclosures are provided. Nonetheless, any increases in those other charges unrelated to the rate lock extension (the legitimate changed circumstance) may not be used… to determine either the 0% or 10% tolerances. [Commentary to §1026.19(e)(3)(iv) #5]
D. Intent to Proceed Date:
Once the consumer indicates an intent to proceed within the time specified by the creditor… the date and time at which estimated closing costs expire are left blank on any subsequent revised disclosures. [Commentary to §1026.37(a)(13) #4]
Banker’s Compliance Consulting 5 1-800-847-1653
TRID
Loan
Ter
ms
Can
this
am
ount
incr
ease
aft
er c
losi
ng?
Loan
Am
ount
Inte
rest
Rat
e
Mon
thly
Prin
cipa
l & In
tere
stSe
e Pro
ject
ed P
aym
ents
bel
ow fo
r you
r Es
timat
ed To
tal M
onth
ly P
aym
ent
Doe
s th
e lo
an h
ave
thes
e fe
atur
es?
Prep
aym
ent P
enal
ty
Ballo
on P
aym
ent
DAT
E IS
SUED
A
PPLI
CAN
TS
PRO
PERT
Y
SALE
PRI
CE
LOA
N T
ERM
30
yea
rs
PURP
OSE
Pu
rcha
sePR
OD
UCT
5
Year
Inte
rest
Onl
y, 5
/3 A
djus
tabl
e Ra
teLO
AN
TYP
E
Conv
entio
nal
F
HA
V
A
___
____
____
__LO
AN
ID #
13
3017
2608
RATE
LO
CK
NO
Y
ES, u
ntil
Loan
Est
imat
e
Proj
ecte
d Pa
ymen
ts
Paym
ent C
alcu
latio
n
Prin
cipa
l & In
tere
st
Mor
tgag
e In
sura
nce
Estim
ated
Esc
row
Amou
nt ca
n in
crea
se o
ver t
ime
Estim
ated
Tota
l M
onth
ly P
aym
ent
Estim
ated
Taxe
s, In
sura
nce
&
Ass
essm
ents
Amou
nt ca
n in
crea
se o
ver t
ime
Befo
re cl
osin
g, yo
ur in
tere
st ra
te, p
oint
s, an
d le
nder
cred
its ca
n ch
ange
unl
ess y
ou lo
ck th
e in
tere
st ra
te. A
ll ot
her e
stim
ated
cl
osin
g co
sts e
xpire
on
Save
this
Loan
Est
imat
e to
com
pare
with
your
Clo
sing
Disc
losu
re.
PAG
E 1
OF
3 •
LO
AN
ID #
133
0172
608
LOA
N E
STIM
ATE
Visi
t ww
w.c
onsu
mer
finan
ce.g
ov/m
ortg
age-
esti
mat
e fo
r gen
eral
info
rmat
ion
and
tool
s.
See
Sect
ion
G o
n pa
ge 2
for e
scro
wed
pro
pert
y co
sts.
You
mus
t pay
for o
ther
pr
oper
ty co
sts s
epar
atel
y.
This
est
imat
e in
clud
esIn
esc
row
? P
rope
rty
Taxe
s H
omeo
wne
r’s In
sura
nce
Oth
er:
Cost
s at
Clo
sing
Esti
mat
ed C
losi
ng C
osts
In
clud
es
in L
oan
Cost
s +
in O
ther
Cos
ts –
in L
ende
r Cre
dits
. See
pag
e 2
for d
etai
ls.
Esti
mat
ed C
ash
to C
lose
Inc
lude
s Cl
osin
g Co
sts.
See
Cal
cula
ting
Cash
to C
lose
on
page
2 fo
r det
ails.
Pro
ject
ed P
aym
ents
Loa
n Te
rms
CLO
SIN
G D
ISCL
OSU
RE
PAG
E 1
OF
5 • L
OA
N ID
# 0
0000
0000
0
Paym
ent C
alcu
latio
n
Prin
cipa
l & In
tere
st
Mor
tgag
e In
sura
nce
Estim
ated
Esc
row
Amou
nt ca
n in
crea
se o
ver t
ime
Estim
ated
Tota
l M
onth
ly P
aym
ent
Estim
ated
Taxe
s, In
sura
nce
&
Ass
essm
ents
Amou
nt ca
n in
crea
se o
ver t
ime
See
page
4 fo
r det
ails
See
Escr
ow A
ccou
nt o
n pa
ge 4
for d
etai
ls. Y
ou m
ust p
ay fo
r oth
er p
rope
rty
cost
s sep
arat
ely.
This
est
imat
e in
clud
esIn
esc
row
? P
rope
rty
Taxe
s H
omeo
wne
r’s In
sura
nce
Oth
er:
Can
this
am
ount
incr
ease
aft
er c
losi
ng?
Loan
Am
ount
Inte
rest
Rat
e
Mon
thly
Prin
cipa
l & In
tere
stSe
e Pro
ject
ed P
aym
ents
bel
ow fo
r you
r Es
timat
ed To
tal M
onth
ly P
aym
ent
Doe
s th
e lo
an h
ave
thes
e fe
atur
es?
Prep
aym
ent P
enal
ty
Ballo
on P
aym
ent
Clos
ing
Cost
s
Incl
udes
$5,
877.
00 in
Loa
n Co
sts +
$7,
642.
43 in
Oth
er C
osts
– $
0
in L
ende
r Cre
dits
. See
pag
e 2
for d
etai
ls.
Cash
to C
lose
In
clud
es C
losi
ng C
osts
. See
Cal
cula
ting
Cash
to C
lose
on
page
3 fo
r det
ails.
Cos
ts a
t Clo
sing
Tran
sact
ion
Info
rmat
ion
Borr
ower
Se
ller
Lend
er
Loan
Inf
orm
atio
nLo
an T
erm
Purp
ose
Prod
uct
Lo
an T
ype
C
onve
ntio
nal
F
HA
V
A
___
____
____
__Lo
an ID
#
MIC
#
Clos
ing
Info
rmat
ion
Dat
e Is
sued
Cl
osin
g D
ate
Dis
burs
emen
t Dat
e Se
ttle
men
t Age
nt
File
#
Prop
erty
Sale
Pric
e
This
form
is a
stat
emen
t of fi
nal l
oan
term
s and
clos
ing
cost
s. Co
mpa
re th
is do
cum
ent w
ith y
our L
oan
Estim
ate.
Clos
ing
Dis
clos
ure
The
orig
inal
Loa
n Es
timat
e
was
del
iver
ed.
The
$500
ap
prai
sal c
harg
e w
as n
ot
disc
lose
d.
A pu
rcha
se a
gree
men
t is
rece
ived
indi
catin
g ne
w
info
rmat
ion;
how
ever
, it
does
not
impa
ct a
ny
tole
ranc
e-re
late
d ch
arge
s.
The
lend
er is
not
requ
ired
to
prov
ide
a re
vise
d LE
at t
his
poin
t
Janu
ary
5th
Orig
inal
Loa
n Es
timat
e
Loan
Ter
ms
Can
this
am
ount
incr
ease
aft
er c
losi
ng?
Loan
Am
ount
Inte
rest
Rat
e
Mon
thly
Prin
cipa
l & In
tere
stSe
e Pro
ject
ed P
aym
ents
bel
ow fo
r you
r Es
timat
ed To
tal M
onth
ly P
aym
ent
Doe
s th
e lo
an h
ave
thes
e fe
atur
es?
Prep
aym
ent P
enal
ty
Ballo
on P
aym
ent
DAT
E IS
SUED
A
PPLI
CAN
TS
PRO
PERT
Y
SALE
PRI
CE
LOA
N T
ERM
30
yea
rs
PURP
OSE
Pu
rcha
sePR
OD
UCT
5
Year
Inte
rest
Onl
y, 5
/3 A
djus
tabl
e Ra
teLO
AN
TYP
E
Conv
entio
nal
F
HA
V
A
___
____
____
__LO
AN
ID #
13
3017
2608
RATE
LO
CK
NO
Y
ES, u
ntil
Loan
Est
imat
e
Proj
ecte
d Pa
ymen
ts
Paym
ent C
alcu
latio
n
Prin
cipa
l & In
tere
st
Mor
tgag
e In
sura
nce
Estim
ated
Esc
row
Amou
nt ca
n in
crea
se o
ver t
ime
Estim
ated
Tota
l M
onth
ly P
aym
ent
Estim
ated
Taxe
s, In
sura
nce
&
Ass
essm
ents
Amou
nt ca
n in
crea
se o
ver t
ime
Befo
re cl
osin
g, yo
ur in
tere
st ra
te, p
oint
s, an
d le
nder
cred
its ca
n ch
ange
unl
ess y
ou lo
ck th
e in
tere
st ra
te. A
ll ot
her e
stim
ated
cl
osin
g co
sts e
xpire
on
Save
this
Loan
Est
imat
e to
com
pare
with
your
Clo
sing
Disc
losu
re.
PAG
E 1
OF
3 •
LO
AN
ID #
133
0172
608
LOA
N E
STIM
ATE
Visi
t ww
w.c
onsu
mer
finan
ce.g
ov/m
ortg
age-
esti
mat
e fo
r gen
eral
info
rmat
ion
and
tool
s.
See
Sect
ion
G o
n pa
ge 2
for e
scro
wed
pro
pert
y co
sts.
You
mus
t pay
for o
ther
pr
oper
ty co
sts s
epar
atel
y.
This
est
imat
e in
clud
esIn
esc
row
? P
rope
rty
Taxe
s H
omeo
wne
r’s In
sura
nce
Oth
er:
Cost
s at
Clo
sing
Esti
mat
ed C
losi
ng C
osts
In
clud
es
in L
oan
Cost
s +
in O
ther
Cos
ts –
in L
ende
r Cre
dits
. See
pag
e 2
for d
etai
ls.
Esti
mat
ed C
ash
to C
lose
Inc
lude
s Cl
osin
g Co
sts.
See
Cal
cula
ting
Cash
to C
lose
on
page
2 fo
r det
ails.
Janu
ary
8th
Purc
hase
Agr
eem
ent
Janu
ary
14th
R
evis
ed L
E #1
Loan
Ter
ms
Can
this
am
ount
incr
ease
aft
er c
losi
ng?
Loan
Am
ount
Inte
rest
Rat
e
Mon
thly
Prin
cipa
l & In
tere
stSe
e Pro
ject
ed P
aym
ents
bel
ow fo
r you
r Es
timat
ed To
tal M
onth
ly P
aym
ent
Doe
s th
e lo
an h
ave
thes
e fe
atur
es?
Prep
aym
ent P
enal
ty
Ballo
on P
aym
ent
DAT
E IS
SUED
A
PPLI
CAN
TS
PRO
PERT
Y
SALE
PRI
CE
LOA
N T
ERM
30
yea
rs
PURP
OSE
Pu
rcha
sePR
OD
UCT
5
Year
Inte
rest
Onl
y, 5
/3 A
djus
tabl
e Ra
teLO
AN
TYP
E
Conv
entio
nal
F
HA
V
A
___
____
____
__LO
AN
ID #
13
3017
2608
RATE
LO
CK
NO
Y
ES, u
ntil
Loan
Est
imat
e
Proj
ecte
d Pa
ymen
ts
Paym
ent C
alcu
latio
n
Prin
cipa
l & In
tere
st
Mor
tgag
e In
sura
nce
Estim
ated
Esc
row
Amou
nt ca
n in
crea
se o
ver t
ime
Estim
ated
Tota
l M
onth
ly P
aym
ent
Estim
ated
Taxe
s, In
sura
nce
&
Ass
essm
ents
Amou
nt ca
n in
crea
se o
ver t
ime
Befo
re cl
osin
g, yo
ur in
tere
st ra
te, p
oint
s, an
d le
nder
cred
its ca
n ch
ange
unl
ess y
ou lo
ck th
e in
tere
st ra
te. A
ll ot
her e
stim
ated
cl
osin
g co
sts e
xpire
on
Save
this
Loan
Est
imat
e to
com
pare
with
your
Clo
sing
Disc
losu
re.
PAG
E 1
OF
3 •
LO
AN
ID #
133
0172
608
LOA
N E
STIM
ATE
Visi
t ww
w.c
onsu
mer
finan
ce.g
ov/m
ortg
age-
esti
mat
e fo
r gen
eral
info
rmat
ion
and
tool
s.
See
Sect
ion
G o
n pa
ge 2
for e
scro
wed
pro
pert
y co
sts.
You
mus
t pay
for o
ther
pr
oper
ty co
sts s
epar
atel
y.
This
est
imat
e in
clud
esIn
esc
row
? P
rope
rty
Taxe
s H
omeo
wne
r’s In
sura
nce
Oth
er:
Cost
s at
Clo
sing
Esti
mat
ed C
losi
ng C
osts
In
clud
es
in L
oan
Cost
s +
in O
ther
Cos
ts –
in L
ende
r Cre
dits
. See
pag
e 2
for d
etai
ls.
Esti
mat
ed C
ash
to C
lose
Inc
lude
s Cl
osin
g Co
sts.
See
Cal
cula
ting
Cash
to C
lose
on
page
2 fo
r det
ails.
The
title
insu
ranc
e bi
ll is
re
ceiv
ed.
The
actu
al c
ost o
f th
e ow
ner’s
and
lend
er’s
title
insu
ranc
e is
kno
wn.
Janu
ary
18th
Ti
tle In
sura
nce
Bill
Janu
ary
22nd
R
evis
ed L
E #2
Janu
ary
31st
C
losi
ng D
iscl
osur
e
The
Clo
sing
Dis
clos
ure
is re
ady.
The
Loan
Est
imat
e co
lum
n w
ithin
the
Cas
h to
Clo
se ta
ble
on p
age
3 m
ust
be c
ompl
eted
usi
ng th
e fe
es n
oted
on
Revi
sed
LE #
2.
To c
alcu
late
fees
for t
oler
ance
pu
rpos
es, t
he fe
es o
n th
e C
D m
ust b
e co
mpa
red
as fo
llow
s:
Appr
aisa
l Fee
= F
rom
Orig
inal
LE
Orig
inat
ion
Fee
= Fr
om R
evis
ed L
E #1
In
spec
tion
Fee
= Fr
om R
evis
ed L
E #2
Ti
tle In
sura
nce
Fee
= Fr
om O
rigin
al L
EAl
l Oth
er C
harg
es =
Fro
m O
rigin
al L
E
The
borro
wer
requ
ests
an
incr
ease
in
the
loan
am
ount
affe
ctin
g th
e ba
nk’s
1% o
rigin
atio
n fe
e:
Loan
Am
ount
: $1
00,0
00 to
$12
5,00
01%
Fee
: $1
,000
to $
1,25
0
A re
vise
d LE
to a
djus
t the
loan
am
ount
an
d or
igin
atio
n fe
e m
ust b
e pr
ovid
ed
with
in 3
bus
ines
s da
ys o
f the
requ
est
in o
rder
to c
aptu
re th
e $2
50
orig
inat
ion
fee
incr
ease
.
Effec
tive
10/1
/18:
Any
revi
sed
LE
mus
t be
com
plet
ed b
ased
on
the
best
in
form
atio
n av
aila
ble
at th
e tim
e di
sclo
sure
is p
rovi
ded
(i.e.
“Goo
d Fa
ith S
tand
ard”
). S
o, in
add
ition
to
revi
sing
the
info
rmat
ion
rela
ted
to th
e ch
ange
d ci
rcum
stan
ce (l
oan
amou
nt
and
orig
inat
ion
fee)
the
lend
er is
re
quire
d to
upd
ate
anyt
hing
new
or
inac
cura
te.
This
incl
udes
any
thin
g
rela
ted
to th
e pu
rcha
se a
gree
men
t re
ceiv
ed J
anua
ry 8
th a
nd m
ust i
nclu
de
the
$500
app
rais
al c
hang
e th
at w
as
not d
iscl
osed
on
the
orig
inal
LE.
The
appr
aisa
l is
rece
ived
. Th
ere
is a
re
pair
that
mus
t be
com
plet
ed b
efor
e th
e ap
prai
ser w
ill si
gn off
on th
e fin
al
appr
aisa
l. T
he a
ppra
iser
will
also
ch
arge
a $
100
insp
ectio
n fe
e to
ver
ify
the
repa
ir ha
s be
en c
ompl
eted
.
A re
vise
d LE
add
ing
the
insp
ectio
n fe
e m
ust b
e pr
ovid
ed w
ithin
3 b
usin
ess
days
of r
ecei
ving
the
appr
aisa
l in
orde
r to
cap
ture
the
$100
insp
ectio
n fe
e.
Effec
tive
10/1
/18:
Any
revi
sed
LE
mus
t be
com
plet
ed b
ased
on
the
best
in
form
atio
n av
aila
ble
at th
e tim
e di
sclo
sure
is p
rovi
ded
(i.e.
“Goo
d Fa
ith S
tand
ard”
). S
o, in
add
ition
to
revi
sing
the
info
rmat
ion
rela
ted
to th
e ch
ange
d ci
rcum
stan
ce (i
nspe
ctio
n fe
e), t
he le
nder
is re
quire
d to
upd
ate
anyt
hing
that
is n
ew o
r ina
ccur
ate
in
rela
tion
to th
e th
e pr
evio
us L
E (R
evis
ed L
E #1
). In
this
exa
mpl
e, th
e ac
tual
cos
t of t
he o
wne
r’s a
nd le
nder
’s tit
le in
sura
nce
is n
ow k
now
n an
d th
eref
ore
mus
t be
upda
ted.
Vers
ion
1.0
The
“Goo
d Fa
ith”
Effec
t* o
n R
evis
ed L
oan
Estim
ates
*July
7, 2
017
TRID
Upd
ate
Fina
l Rul
e
800
847
1653
w
ww.
bank
ersc
ompl
ianc
e.co
m
cons
ulta
nts@
bank
ersc
ompl
ianc
e.co
m
Banker’s Compliance Consulting 6 1-800-847-1653
TRID
E. Changed Circumstances:
1. Extraordinary Event – Beyond Anyone’s Control: [§1026.19(e)(3)(iv)(A)(1)]
a. War
b. Natural Disaster
2. Inaccurate Information: [§1026.19(e)(3)(iv)(A)(2)]
a. Income Verification
b. Employment Verification
3. New Information: [§1026.19(e)(3)(iv)(A)(3)]
a. Unknown Appraisal Issues
b. Unknown Property Boundary Issues
c. Pest Inspection Issues
4. Applicant Eligibility: [§1026.19(e)(3)(iv)(B)]
a. Creditworthiness
b. Collateral Value
5. Applicant Requested Change: [§1026.19(e)(3)(iv)(C)]
a. Amortization Schedule
b. Fixed vs. Variable Rate Feature
c. Power of Attorney Added
Banker’s Compliance Consulting 7 1-800-847-1653
TRID
6. Loan Estimate Expiration: [§1026.19(e)(3)(iv)(E)]
The consumer does not indicate an intent to proceed with the transaction within ten business days or longer (as indicated by the lender) after the Loan Estimate Disclosure was provided. No other justification is necessary. [Commentary to §1026.19(e)(3)(iv)(E) #1]
7. Interest Rate Dependent Charges (Rate Lock Event): [§1026.19(e)(3)(iv)(D)]
If the interest rate was not locked when the Loan Estimate Disclosure was provided a revised version MUST be provided when the interest rate is subsequently locked. This is required even if the interest rate dependent charges do not change as a result of the lock.
8. Delayed Settlement Date on a New Construction Loan: [§1026.19(e)(3)(iv)(F)]
In transactions involving new construction (under or yet to be constructed NOT a remodel or home improvement project), where the creditor reasonably expects that settlement will occur more than 60 days after… the Loan Estimate is provided. …the creditor may provide revised disclosures to the consumer if the original disclosures… state clearly and conspicuously that at any time prior to 60 days before consummation, the creditor may issue revised disclosures. If no such statement is provided, the creditor may not issue revised disclosures, except as otherwise provided…
A home is not under construction if a use and/or occupancy permit was issued prior to delivery of the Loan Estimate Disclosure.
F. Changed Circumstances(s) Total ≤ 10% Cumulative Sum Tolerance:
If a valid changed circumstance occurs but does not cause the cumulative sum of all 10% tolerance charges to exceed the 10% threshold, a revised Loan Estimate Disclosure is not permitted. For example:
An unreleased lien is discovered and the title company must perform additional work to release the lien. However, the additional costs amount to only a five percent increase over the sum of all fees included in the category of fees, which may not increase by more than 10 percent. A changed circumstance has occurred (i.e., new information), but the sum of all costs subject to the 10 percent tolerance category has not increased by more than 10 percent. …the actual title fees of $500 may not be compared to the revised title fees of $500; they must be compared to the originally estimated title fees of $400 because the changed circumstance did not cause the sum of all costs subject to the 10 percent tolerance category to increase by more than 10 percent. [Commentary to §1026.19(e)(3)(iv)(A) #1(ii)]
Banker’s Compliance Consulting 8 1-800-847-1653
TRID
G. Delivery [§1026.19(e)(4)(ii)] and Timing: [§1026.19(e)(4)(i)]
A revised Loan Estimate Disclosure CANNOT be provided (in person or by mail) at the same time as or after the Closing Disclosure is provided.
1. General:
Generally, a revised Loan Estimate Disclosure must be provided within three business days (general) of receiving information sufficient to establish a valid changed circumstance. For example, if information sufficient to establish a valid changed circumstance is received on Monday, a revised Loan Estimate Disclosure must be provided (in person or by mail) by Thursday.
2. Cumulative 10% Tolerance Overage Date:
However, if there are multiple changed circumstances that occur but do not individually exceed the 10% tolerance, a revised Loan Estimate disclosure cannot be provided (in person or by mail) until receipt of the changed circumstance causing the cumulative sum of all 10% tolerance charges to exceed 10%. The revised disclosure must be provided within three business days (general) of that event.
For example, a creditor receives information on Monday that, because of a changed circumstance… the title fees will increase by an amount totaling six percent of the originally estimated settlement charges… The creditor had received information three weeks before that, because of a changed circumstance… the pest inspection fees increased by an amount totaling five percent of the originally estimated settlement charges… Thus, on Monday, the creditor has received sufficient information to establish a valid reason for revision and must provide revised disclosures reflecting the 11 percent increase by Thursday to comply… [Commentary to §1026.19(e)(4)(i) #1(ii)]
3. Rate Lock Event:
No later than three business days (general) after the date the interest rate is locked, the creditor shall provide a revised version of the disclosures… [Commentary to §1026.19(e)(3)(iv)(D)]
Banker’s Compliance Consulting 9 1-800-847-1653
TRID
H. Receipt: [§1026.19(e)(4)(ii)]
The consumer must receive a revised version of the disclosures… not later than four business days (precise) prior to consummation.
1. In Person = Now
2. Mail:
If the revised version of the disclosures… is not provided to the consumer in person, the consumer is considered to have received such version three business days (precise) after the creditor delivers or places such version in the mail.
I. Documentation: [Commentary to §1026.19(e)(3)(iv) #3]
If a revised Loan Estimate Disclosure is provided due to a changed circumstance the reason for the revision must be documented. Documentation must include the original estimated cost, reason for the revision; how the revision affected the cost(s) and that the timing requirements were met.
Banker’s Compliance Consulting 10 1-800-847-1653
TRID
III. Revising the Closing Disclosure: [§1026.19(f)(2)]
A. Inaccurate Closing Disclosure:
If a Closing Disclosure (already provided) becomes …inaccurate before consummation, the creditor shall (must) provide corrected disclosures reflecting any changed terms to the consumer… [§1026.19(f)(2)(i)]
III. Revising the Closing DisclosurePage 10-12
!32
Closing Disclosure“Actual Terms”
Revised Closing Disclosure
“In Hand”No Later Than 3 Days Before Loan Closing
“In Hand” At or Before* Loan Closing
Identification of New Information
& / or a ChangeREVISE
D
Banker’s Compliance Consulting 11 1-800-847-1653
TRID
B. Closing Disclosure Accuracy:
The lender must exercise due diligence in providing the consumer with a Closing Disclosure that reflects the “actual terms” of the transaction based on the best information reasonably available. [§1026.19(f)(1)(i) and Commentary to 1026.19(f)(1)(i) #2)]
1. Best Information Reasonably Available – Due Diligence Expectation:
…the creditor must at a minimum utilize generally accepted calculation tools... The creditor normally may rely on the representations of other parties in obtaining information. For example, the creditor might look to the consumer for the time of consummation, to insurance companies for the cost of insurance, to realtors for taxes and escrow fees, or to a settlement agent for homeowner's association dues or other information in connection with a real estate settlement. [Commentary to §1026.19(f)(1)(i) #2(i)]
2. Actual Terms Unknown:
If an actual term is unknown, the creditor may utilize estimates using the best information reasonably available in making disclosures even though the creditor knows that more precise information will be available at or before consummation. However, the creditor may not utilize an estimate without exercising due diligence to obtain the actual term for the consumer's transaction. [Commentary to §1026.19(f)(1)(i) #2 (ii)]
C. Caution! Delivering Closing Disclosures Too Early:
…the Bureau believes that… the TRID …rules should prevent creditors from sending Closing Disclosures very early in the process before engaging in due diligence to ensure that any costs that are not finalized are estimated in good faith. [Federal Register 5/2/18 – Page 19169]
C. Issuing the CD Too EarlyPage 10-12
!35
Scheduled ClosingX
X TRID 3-Day Mailbox Rule
TRID 3-Day Closing Delay
TRID CD Due Diligence Zone
CD 7-Day Mailing
Deadline
Actual CDDelivery
TRID CD Due Diligence ZoneX
Banker’s Compliance Consulting 12 1-800-847-1653
TRID
D. Resetting Tolerances With a Closing Disclosure (i.e. Valid Changed Circumstance):
Creditors may provide consumers with a revised Closing Disclosure reflecting any charges resulting from a valid changed circumstance and rely on those figures (rather than the amounts disclosed on the Loan Estimate) for purposes of determining “good faith” and the applicable tolerance. Any revised disclosure must be provided within three business days (general) of the valid changed circumstance. [§1026.19(e)(4)]
D. Resetting Tolerances With a CDPage 245-247
!37
Last Revised Loan Estimate
Closing Disclosure Revised Closing Disclosure
With Changes
“In Hand”No Later Than 4 Days Before Loan Closing
“In Hand”No Later Than 3 Days Before Loan Closing
Revised Loan Estimates No Longer Allowed!
DeliveredNo Later Than 3 Days
After the Event
Banker’s Compliance Consulting 13 1-800-847-1653
TRID
E. Review: [§1026.19(f)(2)(i)]
The borrower must be allowed to review the (revised) Closing Disclosure on the business day (general) before consummation. The Closing Disclosure should be completed based upon those items that are known to the creditor at that time.
F. Receipt: [§1026.19(f)(2)(i)]
If the Closing Disclosure becomes inaccurate prior to consummation a revised Closing Disclosure must be received by the borrower at or before consummation.
G. Three-Day Waiting Period: [§1026.19(f)(2)(ii)]
Any of the following changes will require a revised Closing Disclosure to be received by the borrower not less than three business days (precise) prior to consummation:
1. Loan Product Change (i.e., Fixed Rate vs. Adjustable Rate Product or 3/1 ARM vs. 5/1 ARM) [§1026.38(a)(5)(iii)]
2. Inaccurate APR: [§1026.22 & §1026.38(o)(4)]
a. Regular Transactions – More than 0.125% above or below disclosed APR.
b. Irregular Transactions – More than 0.25% above or below the disclosed APR:
i. Multiple Advance (construction loans).
ii. Irregular Payment Schedules (to accommodate seasonal incomes).
iii. Irregular Payment Amounts.
3. Prepayment Penalty Added [§1026.37(b)(4) & §1026.38(b)]
Banker’s Compliance Consulting 14 1-800-847-1653
TRID
H. Post-Consummation Revisions: [§1026.19(f)(2)(iii)]
A revised Closing Disclosure must be provided to the borrower in the event of a change that causes the Closing Disclosure to become inaccurate (amount actually paid by the borrower vs. amount disclosed).
1. Revision Timeframe:
Changes that occur within 30 days after consummation.
2. Revised Disclosure Timing:
…the creditor shall deliver or place in the mail corrected disclosures not later than 30 days after receiving information sufficient to establish that such event has occurred.
I. Non-Numeric Clerical Errors: [§1026.19(f)(2)(iv)]
Non-numeric clerical errors may be corrected by delivering or mailing a revised Closing Disclosure no later than 60 days after consummation. Clerical errors are those that do not affect any numerical disclosure (i.e. amount of any fee) or delivery of the Loan Estimate or Closing Disclosure (i.e., mailing address).
J. Per Diem Interest Changes Post Consummation:
A creditor is not required to provide corrected disclosures… if the only changes that would be required to be disclosed in the corrected disclosure are changes to per-diem interest and any disclosures affected by the change in per-diem interest, even if the amount of per-diem interest actually paid by the consumer differs from the amount disclosed… [Commentary to §1026.19(f)(2)(iii) #2]
Nonetheless, if a creditor is providing a corrected disclosure… for reasons other than changes in per-diem interest and the per-diem interest has changed as well, the creditor must disclose… the correct amount of the per-diem interest and provide corrected disclosures for any disclosures that are affected by the change in per-diem interest. [Commentary to §1026.19(f)(2)(iii) #2]
