Topic: CFPB TILA-RESPA Integrated Disclosure (TRID) Rule
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How should we classify a rate-lock extension fee on a revised Loan Estimate? Is it considered an “origination charge”? We charge this fee when we extend the time period for a rate-lock.
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Yes, a rate-lock extension fee is an origination charge. Under Regulation Z, “origination charges” include each amount that the consumer will pay to the creditor for originating and extending the credit. Such items may include, for example, “application fee, origination fee, underwriting fee, processing fee, verification fee, and rate-lock fee.” As an extension of the…
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Does a non-borrowing spouse need to sign the Closing Disclosure for a purchase mortgage loan if the spouse is listed on the title to the property securing the loan? We would have the spouse sign the mortgage.
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No, Regulation Z does not require a non-borrowing spouse to sign a Closing Disclosure. In fact, Regulation Z does not require any signatures on the Closing Disclosure — obtaining signatures on the Closing Disclosure form is optional. In addition, because the non-borrowing spouse is not entitled to the right of rescission on a purchase transaction,…
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When filling out the new Loan Estimate form, where should we place the following fees? (1) FHA initial mortgage insurance premium, (2) VA initial funding fee, and (3) Conventional Single Premium Borrower/Lender Paid Mortgage Insurance.
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We believe that all three fees should be disclosed under “Services You Cannot Shop For.” The Regulation Z Official Interpretations state that “government funding fees” and “upfront mortgage insurance fees” should be listed on the Closing Disclosure under the heading “Services You Cannot Shop For.” The FHA and VA fees are government funding fees, since…
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Under the TILA-RESPA Integrated Disclosure (TRID) rules, when is a mortgage considered consummated? Does the answer differ for purchase money loans versus refinancings?
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Under Illinois case law, a mortgage loan is consummated on the date of the loan closing (whether a purchase money loan or a refinancing). A number of Illinois courts have held that consummation occurs on the date of the loan closing for purposes of the TILA and Regulation Z. For resources related to our guidance,…
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If an LLC enters into a mortgage loan for the purpose of purchasing the primary residence for the LLC’s owner, do the TILA-RESPA Integrated Disclosure (TRID) rules apply?
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No, the TRID rules do not apply to loans made to business entities. The TRID rules (and Regulation Z generally) apply only to consumer credit transactions, meaning loans offered to a consumer for personal, family or household purposes. A loan extended to a business entity, such as an LLC, is exempt. However, you may have…
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Can you give me the list of disclosures I would need to perform a mortgage loan renewal for a closed-end balloon loan? Can we charge the customer for an appraisal? We are not advancing new money to the borrower.
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We are not aware of any laws or regulations that require you to provide specific disclosures when renewing a mortgage loan (versus refinancing a mortgage loan, which would require new TILA and RESPA disclosures). We do recommend consulting with your bank counsel when creating the loan renewal agreement and any other legal documents. In addition,…
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We are in the process of modifying an existing home equity balloon loan to extend the term from five years to ten years and to begin amortization. The loan has matured. Can we modify the loan without providing the new TRID disclosures, or should we treat it as a refinancing?
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We believe that you may renew a balloon loan after its maturity date without it falling within Regulation Z’s definition of a “refinancing” (which would require new disclosures under the TRID requirements). However, the language that you use in the loan modification documents is important in order to achieve this result. The Seventh Circuit has…
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If we have a loan secured by a mobile home that is treated as chattel property under Illinois law, what disclosures and timing requirements apply under Regulation Z? (The loan is not secured by land.)
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While the TRID rules and Regulation X do not apply to a loan secured by a mobile home that is not also secured by land, there are certain provisions of Regulation Z that do apply. Under Regulation Z, you should provide an interest rate and payment summary, together with a specialized disclosure required for non-TRID…
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We have a loan secured by a first mortgage on a commercial property and a second mortgage on the borrowers’ primary residence. The second mortgage on the residence was added to the transaction as an abundance of caution. The proceeds of this loan will be used to pay off the borrowers’ personal debt. Do the TILA-RESPA integrated disclosure (TRID) disclosure requirements and the right of rescission apply in this case?
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Yes, we believe the TILA-RESPA disclosure requirements and right of rescission would apply in this case, as discussed in more detail below. The TRID rules apply to most closed-end consumer credit transactions secured by real property. Regulation Z defines the phrase “consumer credit” to mean credit offered or extended to a consumer primarily for personal,…
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We are trying to assess the risks of the new TILA-RESPA Integrated Disclosure (TRID) requirements. What is the statute of limitations for customer claims regarding issues with the new disclosure forms?
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Generally speaking, the Truth in Lending Act provides a three-year statute of limitations for violations of its disclosure requirements. Generally, the RESPA does not provide a private right of action for violations of its disclosure requirements. The CFPB provided a brief but concise overview of the private rights of action under the TILA and RESPA…