The CFPB recently issued an update to its Truth in Lending Act (TILA)/Real Estate Settlement Procedures Act (RESPA) Integrated Disclosure (TRID) rule FAQs to address a partial exemption added by the Building Up Independent Lives and Dreams Act (BUILD Act) that became law in January 2021.
Before the adoption of the BUILD Act, Regulation Z under TILA already included a partial exemption from the Loan Estimate and Closing Disclosure requirements of the TRID rule for subordinate housing assistance loans that met certain conditions. The BUILD Act added a partial statutory exemption from such requirements for similar transactions. The FAQs provide that to qualify for the BUILD Act partial exemption, a transaction must meet all of the following criteria:
- The loan must be a residential mortgage loan.
- The loan must be offered at a 0 percent interest rate.
- The loan must only have bona fide and reasonable fees.
- The loan must be primarily for charitable purposes and made by an organization described in Internal Revenue Code section 501(c)(3) and exempt from taxation under section 501(a) of that Code.
For a transaction that qualifies for the partial exemption under the BUILD Act, a creditor may elect not to provide the applicant with a Loan Estimate or Closing Disclosure. If a creditor elects not to provide such disclosures for a qualifying transaction, the creditor must provide the applicant with a Good Faith Estimate and HUD-1 Settlement Statement under RESPA and a traditional disclosure statement under TILA. Creditors relying on the BUILD Act partial exemption also must provide applicants with the Special Information Booklet under RESPA.