On February 10, 2016, the Consumer Financial Protection Bureau (CFPB) issued a correction in the Federal Register to the Integrated Mortgage Disclosures Under the Real Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act (Regulation Z) final rule (TRID Rule). The final TRID Rule, which went into effect on October 3, 2015, combines mortgage disclosures that consumers receive when applying for and obtaining a mortgage loan. Supplementary information to the rule contained a typographical error, which the CFPB has now corrected. Although the revision is small, it could potentially have substantial effects on mortgage lenders.
Section 1026.19(e)(3)(iii) concerns the variations permitted for certain charges and provides that prepaid interest, property insurance premiums, “[a]mounts placed into an escrow impound, reserve or similar account,” and “[c]harges paid for third-party services not required by the creditor,” are not subject to a tolerance limitation. Property taxes, homeowner’s association dues, condominium fees, and cooperative fees are considered “[c]harges paid for third-party services not required by the creditor.” The supplementary information was initially drafted to say that these fees are subject to tolerances. The CFPB’s revision clarifies that “property insurance premiums, property taxes, homeowner’s association dues, condominium fees, and cooperative fees” are not subject to tolerances.
Any mortgage lender that believes it previously included these fees in a tolerance calculation may have inadvertently incurred higher fees than necessary. If you think that this may apply to your organization, an in-house review may be in order.