With the new Truth in Lending Real Estate Settlement Procedure Act Integrated Disclosure (TRID) rules, the industry is revving up for a busy summer of compliance checks and training as the rules are going to shake up the status quo quite a bit. One thing that the industry can do in order to make the transition a little less traumatic, though, is to start modifying a few policies ahead of time.
Although Consumer Financial Protection Bureau Director Richard Cordray dismissed concerns with the Aug. 1 implementation date for the new integrated disclosure rules as being unwarranted because August is a busy time for closings, not applications, there is one caveat that may get some lenders in trouble when it comes to the change in the definition of an application.
As hopefully everyone in the industry is aware by now, an application under the new rules is the receipt of six key items: The consumer’s name; the consumer’s income; the consumer’s Social Security number, used to obtain a credit report; the property address; an estimate of the value of the property; and the mortgage loan amount sought.
They are the same six items listed in the original rules, with one exception: The new rules exclude the catch-all seventh item listed in the application definition. That elimination makes all the difference between a non-application and an application that sets the Loan Estimate clock ticking.
Here’s where it gets tricky: If lenders do not modify their own definitions of what an application entails prior to the Aug. 1 implementation date, there will be non-applications that, when the clock strikes midnight, will become applications under the new rule.
Thus, although lenders are not permitted to use the new integrated disclosure forms before Aug. 1, it is strongly encouraged that they at least modify their own definition of an application (aka sans the “catch-all” extras) to conform with the new rule. That way, there will not be a backlog of non-applications that suddenly need attention on Aug. 1. Additionally, the new definition will help ease the staff into adjusting to at least one requirement of the new rules.
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