FDIC issues TRID Exam Procedures: Integrating TILA and RESPA
On June 30th of this year, the FDICissued guidelines for banks related to compliance examination procedures for Truth-in-Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). The Integrated Disclosure Rule for the two acts is commonly referred to as “TRID."
The TRID rules were issued by the Consumer Financial Protection Bureau (CRPB) in late 2013, and further revised in February of this year. The rules are slated to go into effect on August 1, although the CFPB is currently taking comments on delaying the effective date to October 3, 2015. The comment period closes on July 7.
Briefly, the TRID rules sought to integrate the RESPA and TILA disclosures for certain closed-end mortgages, excluding certain loans such as reverse mortgages, home equity lines of credit, and mobile home loans. The new rules also modified the timing of disclosures and revised the definition of “application” triggering the disclosure requirements. The new definition is a 6-factor test requiring the following information from the consumer: name, income, social security number, property address, estimated value of property, and loan amount sought.
To assist banks with compliance, the CFPB developed a comprehensive set of online resources for TILA-RESPA Integrated Disclosure Rule implementation, which is available here. The resources include a compliance guide, a guideline to forms, a closing factsheet, a disclosure timeline, and sample disclosure forms.
Thenew examination procedures also addressed changes to the following rules:
- Higher Priced Mortgage Loan Appraisal Rule, which exemps certain transactions from appraisal requirements;
- Mortgage Servicing Rules, which modified the definition of “small servicer” to include nonprofit entities servicing fewer than 5000 mortgages;and
- Ability to Repay/Qualified Mortgage Rule, which added a “cure provision” allowing creditors or assignees a set amount of time to refund to the consumer excess points, fees, or interest on either as necessary to allow the mortgage to maintain Qualified Mortgage (QM) status.
The examination guidelines were issued as part of Financial Institution Letter FIL-27-2015, which can be found here.