Current Important Topics
TRID Disclosure Timing
What is TRID? TRID is an acronym made up from other acronyms. TRID is short for TILA-RESPA Integrated Disclosures. TILA is the acronym for the “Truth in Lending Act” and RESPA is the acronym for the “Real Estate Settlement Procedures Act”. Many things related to TRID are conditional: the definition of “application” differs from most other regulations. As an example, there are multiple definitions of “business day”. Also, the requirements are spread out: be sure to check the regulation, the commentary, the published guidance FAQs, and the final rule preamble if you want to understand a requirement the best that you can.
The requirements for an extension of credit to be subject to the TRID requirements, it must be all of the following: 1) Closed End, 2) Made to a consumer, 3) For a consumer purpose, and 4) Secured by Real Estate.
It should be noted that TRID requirements are largely concerning two types of disclosures. First, The Loan Estimate and Second, The Closing Disclosure. The Loan Estimate is a reliable estimate of costs provided early in the process of the loan application. The Closing Disclosure is the detailed listing of costs given just before the loan closing. This confirms for the customer the cost of the credit.
The timing requirements of TRID start as soon as the financial institution receives an “application”. This is specifically defined as: submitting the applicants name, income, social security number, collateral property address, estimated value of the property, and the loan amount requested. (The Loan Estimate, Contents: 1026.37; Timing: 1096.19(e))
Once these six pieces of information are received the institution has 3 business days to provide the applicant with the “Loan Estimate”. For the purpose of the loan closing, any revised “Loan Estimate” must be received by the applicant four business days prior to the closing.
The TRID disclosure is a receipt requirement and not a sending requirement, it is considered to be received three business days after it is sent.
Before closing a loan, the institution must send the “Closing Document” to the applicant. This must be received at least three business days prior to the loan closing. If there is a change in the APR by a prepayment penalty or a changed in the loan product, the institution is required to provide a revised “Closing Disclosure” to the applicant. (The Closing Disclosure, Contents: 1026.38: Timing 1029.19(e))
(Reference: Utah Banker Issue 2 – 2021 / Compliance Corner by John Berteau)
Regulatory Question and Answer
Question: Are paid expenses considered a thing of value under Bank Bribery Act?
Answer: No. Section (c) specifically states: This section shall not apply to bona fide salary, wages, fees, or other compensation paid, or expenses paid or reimbursed, in the usual course of business.
Note: Although compensation under this section is not considered bribery, other regulations and acts do prohibit compensation depending on circumstances – e.g., RESPA Section 8.
Reference: Bank Bribery Act 18 USC 215(c)
Question: Can a bank charge a late fee if a borrower does not pay an existing late fee?
Answer: No. You cannot charge a late fee for a late fee. This is called pyramiding of late fees and is prohibited in the servicing practices section of Regulation Z 1026.36(c)(2).
Reference: 12 CFR 1026.36(c)(2).
Question: Bank Protection Act: Is training required under the regulation?
Answer: Yes. It is the responsibility of the Bank Security Officer to ensure that all bank personnel are trained on the security program. Initial and periodic training is required.
Reference: FED 12 CFR 208.61; OCC 12 CFR 21; FDIC 12 CFR 326
