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Is a short-term bridge loan to purchase a primary residence that will be secured by the borrower’s current and new residence subject to the TILA-RESPA Integrated Disclosure (TRID) requirements? – IBA Compliance Connection

IBA Compliance Connection

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Is a short-term bridge loan to purchase a primary residence that will be secured by the borrower’s current and new residence subject to the TILA-RESPA Integrated Disclosure (TRID) requirements?

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Yes, the TRID requirements apply to all closed-end consumer credit transaction secured by real property (other than a reverse mortgage). There is no exception to the TRID requirements for a short-term, temporary bridge loan. Certain bridge loans are exempt from certain other Regulation Z requirements (including some of the ability-to-repay (ATR) and qualified mortgage (QM) requirements), but not from the TRID requirements.

For resources related to our guidance, please see:

  • Regulation Z, 12 CFR 1026.19(e) and (f) (The TRID requirements apply to any “closed-end consumer credit transaction secured by real property . . . .”)
  • Regulation Z, 12 CFR 1026.43(a)(3)(ii) (The ATR requirements apply to “any consumer credit transaction that is secured by a dwelling . . . other than: . . . For purposes of paragraphs (c) through (f) of this section [but not for purposes of paragraph (g), Prepayment penalties] . . . (ii) A temporary or ‘bridge’ loan with a term of 12 months or less, such as a loan to finance the purchase of a new dwelling where the consumer plans to sell a current dwelling within 12 months or a loan to finance the initial construction of a dwelling; . . .”)