Range from simple to egregious
Regardless of how minor or major a mistake is, it still is one. A recent letter from the Association of Mortgage Investors gave an inside look at some of the mistakes that have come from the new TRID rule.
AMI wrote a letter to Consumer Financial Protection Bureau Director Richard Cordray to express the mortgage investor community’s concerns over the bureau’s “Know Before You Owe” mortgage disclosure rule, including specific examples of issues that are cropping up.
Here are a few samples from each one, and given the minute details of the examples, be sure to check the full letter here. The examples are included in the appendix at the end.
Frequent loan estimate defects
- Numerical computation errors on the Loan Estimate (e.g., itemization of Loan Costs do not total the Total Loan Costs on page two of the Loan Estimate, Loan Costs and Other Costs do not total Estimated Closing Costs in the Costs at Closing table on page one of the Loan Estimate).
- The Estimated Closing Costs are not calculated in the same manner as the Total Closing Costs disclosed on page 2 of the Loan Estimate.
- Prepaids table does not include the applicable time period covered by the amount to be paid by the borrower and the total amount paid.
Frequent closing disclosure defects
- Calculating Cash to Close table does not reflect “Yes” when amount changed from Loan Estimate to Final. When the answer to the question is “Yes”, there is no indication where the consumer can find the amounts that have changed on the Loan Estimate.
- Numerical computation errors (e.g., itemization of Loan Costs do not total the Total Loan Costs on page two of the Closing Disclosure, Loan Costs and Other Costs do not total Closing Costs in the Costs at Closing table on page one of the Closing Disclosure).
- Loans closed prior to three day waiting period.
Examples of technical and minor errors frequently cited as TRID violations
- TRID: Loan Estimate disclosed the Courier, wire, and storage fees on the same line in the closing costs section. Each fee should be disclosed on its own line.
- TRID: LE Loan Costs/Other Costs Deficiency – The “Title – CPL” Fee is not labeled correctly on the Loan estimates. CPL is not an Acceptable abbreviation and should reflect “Closing Protection Letter”.
While the CFPB has continuously said yes, there inevitably will be inadvertent errors in the early days, but that is why the bureau and the other regulators have made clear that the initial examination for compliance with the new rule will be sensitive to the progress industry has made.
Reviews over TRID will come down to whether companies have made good faith efforts to come into compliance with the rule.
However, this answer hasn’t satisfied the industry, leaving both investors and lenders still afraid to partake in the new TRID world.
These errors are small but not unproblematic. “It is not simply the probability of a lawsuit or potential legal costs – although those are certainly factors – there is reputational risk; increased transaction and operational costs; and, post-crisis, there is little corporate tolerance for any legal or regulatory risks,” AMI said in its letter.
In the meantime, a bill designed to give the mortgage industry more defined security on TRID implementation is stuck in limbo after a series of attempts to get it passed.