Tracking TRID

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Common errors in mortgage disclosure documents identified

By Mary Thorson Wright

Community bankers learn early on that “final” rules, like the one for the Truth in Lending Act-Real Estate Settlement Procedures Act Integrated Disclosure rule (TRID), are only the beginning of a journey to successfully assimilate new regulations into day-to-day procedures. Feedback from the industry is critical to identifying and resolving technical issues early and to developing workable, meaningful regulations.

Just six months after the Oct. 3, 2015, announcement of the final TRID, the Association of Mortgage Investors sent a letter to the Consumer Financial Protection Bureau to express concerns over TRID documentation errors for the secondary mortgage market. AMI cited minor and major mistakes that have surfaced in post-TRID loans, which it says have caused a significant percentage of mortgage loans to be deemed ineligible by secondary market investors.

AMI grouped the TRID errors into three categories: Loan Estimate Disclosures, Closing Disclosures, and technical and minor errors. The most notable defects are presented here, and community banks should consider reviewing the letter and appendices listing the defects in their entirety.

Loan Estimate defects

  • Nonnumerical clerical errors, such as lender name or address missing; various incorrect or incomplete fields.
  • Numerical computation errors, such as itemization of loan costs and estimated closing costs.
  • Disclosure omissions, such as an applicable time period and the total amount paid in the prepaids table; amount escrowed per month for each item; the number of months collected at consummation; and the total amount paid in the initial escrow payment at closing table.
  • Estimated taxes, insurance and assessments checkboxes are inaccurate or incomplete.
  • Other considerations table is incomplete. For example, the checkbox is not selected on whether the subsequent purchaser can assume the loan on the original terms, or a statement detailing any amount that may be imposed for a late payment is not provided.
  • Closing Disclosure defects

  • Nonnumerical clerical errors, such as a lender’s or seller’s name or address is incorrect or missing; transaction information is wrong; or checkboxes are incorrect or incomplete.
  • Numerical computation errors, such as in itemizing loan costs or total closing costs.
  • Disclosure omissions, such as fees in the loan costs table and other costs table for services are not previously disclosed; the time period covered and the total amount paid are omitted from the prepaids table; the amount escrowed per month for each item, the number of months collected at consummation and the total amount paid in the initial escrow payment at closing table are omitted.
  • The estimated taxes, insurance and assessments checkboxes are inaccurate or incomplete.
  • Loans are closed prior to the three-day waiting period.
  • Technical and minor errors

  • Improper rounding, improper abbreviations and misplaced decimal points. These potentially include loan estate total interest paid calculation; CD interest rates; loan estimate of loan costs; and abbreviations on loan estimates and CDs.
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    The CFPB has signaled it will likely issue TRID amendments to provide greater certainty and clarity. Although enhancing the formal guidance with information from webinars and other compliance resources may be beneficial, feedback from the field needs to guide future revisions to clarify technical requirements and help minimize errors in industry practices.


    Mary Thorson Wright, a former Federal Reserve managing examiner, is a financial writer in Virginia.

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