Loan estimate

Reach Beyond Surface Compliance With TRID

The CFPB’s “Know Before You Owe” rule changed the definition of a mortgage application under RESPA to include just six specific pieces of information. An attendee of a recent ATS Secured webinar asked how to collect this information:

As a Lender, How Do I Collect the Information I Need To Provide An Accurate Loan Estimate Under the New Definition of “Application”?

This question caught my attention because it has the right perspective. Not everyone in the mortgage industry understands the importance of the how because they are still hung up on why. The fact is, these rules are here to stay. It is imperative for mortgage professionals to reach beyond surface compliance and ensure they are not only obeying TRID to the letter of the law, but throughout the entire process.

TRID Rules Around a Mortgage Application

Here’s what webinar speaker Ben Olson, former Deputy Assistant Director for the Office of Regulations at the Consumer Financial Protection Bureau, has to say about it:

Implementing the TRID rule is as much about improving the way you and your systems manage information as it is about providing the new forms. This is because the TRID rule uses the existing mortgage disclosure framework you are familiar with, but enhances and tightens those requirements so that compliance can only be achieved if you have the ability to collect, track, and analyze the information you receive during the origination process. That begins with determining when you have received an “application.”

As is the case today with the GFE and initial TIL disclosure, mortgage lenders must provide the LE no more than three business days after you receive an “application.”[1] Unlike the former rules, they will no longer have the right to gather all the information they need before providing an estimate.

TRID Definition of Mortgage Application

Instead, under the TRID rule, you will generally be considered to have received an “application” once the consumer has submitted these six pieces of information for the purpose of obtaining an extension of credit:

  1. The consumer’s name;
  2. The consumer’s income;
  3. The consumer’s social security number to obtain a credit report;
  4. The property address;
  5. An estimate of the value of the property; and
  6. The mortgage loan amount sought.[2]

And with these six pieces of information, the three-business-day deadline begins. Although the CFPB has said you may attempt to sequence the collection of information so you receive everything you need to provide an LE before the submission of the last of the six items, it has also advised that you cannot refuse to accept any of the six items.[3]

As the lender, you must be able to track and document the information you have received and when you received it. If you work with brokers, you must also be able to document the information the broker received and when, because you retain responsibility and liability for providing a compliant LE.[4] Accordingly, you may want to ensure that you have sufficient time during the three day period to review any LE the broker prepares before they provide it to the consumer.

[1] 12 C.F.R. § 1026.19(e)(1)(iii).

[2] 12 C.F.R. § 1026.2(a)(3)(ii).

[3] Cmt. 2(a)(3)-1; BuckleySandler Unofficial Transcript of Aug. 26, 2014 CFPB Webinar (“Transcript”) at 11, available at http://www.buckleysandler.com/uploads/1082/doc/TILA-RESPA_Integrated_Disclosures_8-26-2014_Transcription.pdf (stating that “the Bureau has never endorsed refusal of any of the six elements by a creditor because it would like additional information”).

[4] 12 C.F.R. § 1026.19(e)(1)(ii); cmt. 19(e)(1)(ii)-2.

 

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