UPDATE: CFPB Rule Allows Sharing of TRID Closing Disclosure

(The following article is copyrighted by and reprinted with the permission of the Association of Real Estate License Law Officials (ARELLO®)).

The Consumer Financial Protection Bureau (CFPB) recently finalized amendments to its “Know Before You Owe” mortgage disclosure rules, one of which should make it easier for real estate professionals to obtain access to the “new” Closing Disclosure (CD) form.

The CFPB TILA-RESPA Integrated Mortgage Disclosure rules (commonly referred to as “TRID”, but labeled “Know Before You Owe” by the CFPB) took effect in October 2015. The rules replaced the previous disclosure forms required in all “federally-related” residential mortgage transactions, including the once familiar HUD-1 settlement statement, with the CFPB’s mortgage Loan Estimate and Closing Disclosure forms.

When the lengthy and intricate new TRID rules took effect, much attention was focused on the resulting compliance issues and mortgage process disruptions that were experienced by mortgage lenders/ originators, title companies and other transaction service providers. Less publicized was an unintended consequence of the rules that left many real estate licensees with difficulties in obtaining copies of completed Closing Disclosure forms from lenders. The problem arose from lender concerns regarding the privacy provisions of the Graham-Leach-Bliley Act (GLBA) and Regulation P, which restrict lender disclosure of customers’ “nonpublic personal information” (NPI) to third parties. This complication, as well as the nature and contents of the Closing Disclosure form, also prompted some state regulators to address the impact of TRID on real estate license law matters such as recordkeeping and transaction closing statement requirements.

The National Association of REALTORS® (NAR) has previously pointed out to the CFPB that, prior to implementation of TRID, real estate agents routinely had access to and used the now-defunct HUD-1 settlement statement to answer client questions about matters such as concessions, escrows, commissions and prorated taxes. NAR has also urged the CFPB to clarify that, under Regulation P, “…it is just as acceptable now as it was before Know Before You Owe for a lender to share the [Closing Disclosure] with third parties ….”

For its part, the CFPB’s rulemaking proposal issued in July 2016 acknowledged that the Real Estate Settlement Procedures Act (RESPA) and its implementing regulations required settlement agents to issue the HUD-1 form to lenders, borrowers, sellers, and their agents. The CFPB also acknowledged that, in accordance with applicable exceptions to the privacy requirements of the GLBA, it [is] “usual, accepted, and appropriate” for creditors and settlement agents to provide the new Closing Disclosure form to consumers, sellers, and their real estate brokers or other agents. Consequently, the CFPB’s recent final rules incorporate its previous informal guidance on the subject and modify the official TRID commentaries to clarify that a creditor may provide separate disclosure forms to a consumer and seller if state law prohibits sharing information in the disclosure form, as well as in any other situation where the creditor chooses to provide separate disclosures, and establishes the three methods that may be used to make such modifications.

Among numerous other amendments, the final rules also create tolerances for “total of payments” calculations, adjust an exemption mainly affecting housing finance agencies and nonprofits, and extend coverage of the disclosure requirements to cooperative units.

This article came from the October 2017-Vol48-2 edition of the bulletin.