Compliance Updates

August: Weekly Compliance Updates

TRID Hot Topic Series: May a Revised LE be provided after a CD?

August 29, 2014

A question similar to this one posed in the title came up in the CFPB's Frequently Asked Questions on TILA-RESPA Integrated Disclosures webinar hosted August 26, 2014. The general answer is "no," but some interesting timing issues come into play with the rules, here's a brief overview of the rules:

  • Reg Z § 1026.19(f)(1)(ii) requires that the consumer receive the CD no later than 3 business days prior to consummation.
  • Reg Z § 1026.19(e)(3)(iv) and 19(e)(4) allows creditors to redisclose charges increased due to changed circumstances or other triggering events by providing revised LEs up until the point that the creditors provide a CD, and further allows creditors to add changed circumstances not disclosed with a revised LE directly to the CD when the CD is provided no more than 3 days prior to closing and it would not have been feasible to provide a revised LE prior to delivery of the CD because the triggering event did not appear far enough in advance to reasonably allow the lender to deliver the revised LE prior to delivery of the CD.
  • Reg Z § 1026.19(e)(4)(i) states that creditors shall provide revised estimates within three business days of receiving information sufficient to establish that one of the reasons for revision has been met.

TRID Hot Topic Series: Responsibility of LE Delivery for Lenders and Brokers

August 25, 2014

The comment to § 1026.19(e)(1)(ii) relates the idea that "the creditor must ensure that disclosures provided by mortgage brokers comply with all requirements of [the Loan Estimate disclosures]." By pinning the responsibility of providing the LE on the creditors, even if it's the broker taking the application, interesting issues arise; including but not limited to the following questions: (1) How will the lender know when the broker has received an application that the broker plans on presenting to the lender? (2) How will the broker know what the Lender's current rates or other bits of information to provide the consumer with an accurate LE within three days time? Or, (3) can the lender just issue a revised LE if the one issued by the broker is inaccurate? (Read More)


TRID Hot Topic Series: Verification of Information

August 18, 2014

Regulation Z, § 1026.19(e)(2)(iii) states "The creditor or other person shall not require a consumer to submit documents verifying information related to the consumer's application before providing the [Loan Estimate] disclosures required by (e)(1)(i) of this section. The commentary to this also states that the creditor "may collect from the consumer any information that it requires" in conjunction with collecting the consumer's application information; however, "the creditor is not permitted to require, before providing the [Loan Estimate], that the consumer submit documentation to verify the information collected from the consumer." The commentary illustrates this with the example: "a creditor may require the sale price and address of the property, but the creditor may not require the consumer to provide a purchase and sale agreement to support the information the consumer provides orally before the [Loan Estimate]."
(Read More)

Did You Know Series: CFPB eRegulation Comparisons

August 13, 2014

Many IDS Customers already know that the CFPB has launched a more user-friendly regulation website that currently includes 12 CFR § 1005 (Reg E) and 12 CFR § 1026 (Reg Z). The website address is http://www.consumerfinance.gov/eregulations/. Besides sporting an easier-to-read contemporary design, there are some new features that create additional functionality that IDS Compliance has determined could save some mortgage compliance professionals hundreds of hours of time.

One not-so-readily-apparent feature that IDS Compliance is really fond of is the "COMPARE THIS WITH" feature that clearly shows changes made between two compared versions of the same regulation. Seeing changes parts of the reg side by side creates clarity when trying to discern exactly what's new and when trying to understand the intent of the regulation writers. Here's how to take advantage of this feature using the current version of Reg Z compared with the August 1, 2015 version of Reg Z that implements the TRID changes. (Read More)

Did You Know Series: Special Information Booklets

August 4, 2014

Each of these books is required under regulatory authority. And the organization which has received authority over the regulations that require these consumer-oriented booklets is none other than the Consumer Financial Protection Bureau (CFPB). Here's a little about each booklet:

1. The CHARM booklet is required pursuant to Regulation Z, § 1026.19(b), which states that any time "the annual percentage rate may increase after consummation in a transaction secured by the consumer's principal dwelling with a term greater than one year, the following disclosures [the CHARM booklet and others] must be provided at the time an application is provided or before the consumer pays a nonrefundable fee, whichever is earlier." This booklet was originally prepared by the Board of Governors of the Federal Reserve System and the Office of Thrift Supervision. The CFPB has basically adopted it almost "as is" for now; however, the CFPB has stated that it will change to be aligned with the CFPB's other resources and tools geared towards the CFPB's mission to educate consumers. (Read More)