The Consumer Financial Protection Bureau proposed several updates to the TILA-RESPA Integrated Disclosure rule.
The proposed amendments to the CFPB’s “Know Before You Owe” rule are intended “to formalize guidance in the rule and provide greater clarity and certainty,” the bureau said.
Besides a number of technical corrections, the bureau also is proposing tolerance provisions for the total of payments, guidance on sharing disclosures with third parties, an adjustment to a partial exemption mainly affecting housing finance agencies and nonprofits, and extension of coverage of the integrated disclosure requirements to all cooperative units.
“While we don’t anticipate that this proposal will address all of our concerns – and are certain others will arise – we do appreciate the good faith effort made by Director Cordray and the CFPB to begin a process for ensuring an improved rule that will benefit all participants in the loan process,” said Rob Nichols, president of the American Bankers Association.
The amendment would reincorporate the finance charge into the calculation for the total payments disclosure. While this was the case prior to its adoption, the TRID rule changed the total of payments calculation so that it did not make specific use of the finance charge. Now, the bureau’s proposal would include tolerance provisions for the total of payments that parallel existing tolerances for the finance charge and disclosures affected by the finance charge.
After receiving many questions about sharing consumer mortgage disclosures with third parties in the transaction, the CFPB “understands that it is usual, accepted and appropriate” for creditors and settlement agents to provide a closing disclosure to consumers, sellers and their real estate brokers or other agents.
The TRID rule gave a partial exemption from disclosure requirements to certain housing assistance loans originated primarily by housing finance agencies. The proposed update would clarify that recording fees and transfer taxes may be charged in connection with those transactions without losing eligibility for the partial exemption. The rule would also exclude recording fees and transfer taxes from the exemption’s limits on costs.
Currently, the TRID rule only covers transactions secured by real property, as defined under state law. Cooperatives are sometimes treated as personal property under state law and sometimes as real property, so the CFPB is proposing to extend the rule’s coverage to include all cooperative units.
Cam Fine, president of the Independent Community Bankers of America, also expressed appreciation of the clarification. “We look forward to continuing to work with the bureau on this important rule to ensure community bank concerns are addressed and that these requirements do not unduly burden consumers’ access to credit,” he said.