On Tuesday, January 20, the CFPB promulgated its first final rule of 2015, a series of minor amendments to the TILA/RESPA integrated disclosures (TRID) rule. The substantive changes to the TRID rule are (1) an extension of the time period to issue a revised Loan Estimate when an interest rate moves from floating to locked, and (2) a provision for disclosing that a creditor has reserved its right to issue a revised Loan Estimate for loans funding new construction.
As originally adopted, the TRID rule required creditors to provide a revised Loan Estimate the very same day that a consumer locked a floating rate. This differed from the general requirement under the TRID rule, which required creditors to issue a revised Loan Estimate no later than three business days after learning of a change that necessitated a revision.
The industry advised the CFPB that the requirement to issue a revised Loan Estimate on the date of the rate lock would not only present significant operational burdens, but also would result in changes to lock-in policies that would be adverse to consumers. In short, creditors would have to set deadlines to lock rates very early in the day if a revised Loan Estimate had to be issued on the date of the lock.
When the CFPB proposed in October 2014 to revise the time frame, it proposed to require creditors to issue a revised Loan Estimate no later than the business day after the consumer locked the rate. The industry advised the CFPB the time frame still would present operational burdens and result in unfavorable changes to lock-in policies. In the end, the CFPB amended the TRID rule to allow three business days for creditors to prepare and provide a revised Loan Estimate when the rate moves from floating to locked.
The second of two substantive amendments to the TRID rule applies only in the context of loans for new home construction where consummation is expected to occur at least 60 days after the creditor issues the initial Loan Estimate. With respect to these loans, the TRID rule permits a creditor to reserve the right to issue a revised Loan Estimate any time prior to 60 days before consummation, as long as the creditor includes a statement to this effect in the Loan Estimate. For most loans, however, the Loan Estimate will be a standard form that cannot be revised except as expressly permitted by the TRID rule; the original TRID rule did not provide for where in the Loan Estimate such a statement could be included. As indicated in the preamble to the October 2014 proposed rule, the Bureau’s failure to provide a space for this statement in the original TRID rule was an oversight. The amendment allows for the statement to be included in the “Other Considerations” section on page 3 of the Loan Estimate.
The final rule also includes a conforming change to the loan originator provisions in Regulation Z section 1026.36. Among various requirements, the loan originator provisions require certain loan originator identification information (name and NMLSR ID) to be included in specified loan documents. When the CFPB originally adopted the requirement, it decided not to require that the information be included in the existing TILA and RESPA disclosures. The CFPB knew that the existing disclosures would soon be replaced by the disclosures under the TRID rule, and it decided not to require that the existing disclosures be modified to provide for the disclosure of this information. The conforming change revises the disclosure requirement to provide for the loan originator identification information to be included in the disclosures under the TRID rule.
The balance of the final rule is comprised of non-substantive corrections to the TRID rule. The amendments, including the single addition to the loan originator rule, will become effective on the same date as the TRID rule—August 1, 2015.