Highlights from New TRID Rule
Feel free to settle into a cozy armchair with a cup of coffee and a highlighter and read the 293 pages of the new TRID Rule amendments. Or, of course, stay tuned here and we'll try to keep you up to date.
So I'm sure by now you're aware that the CFPB's long-awaited update to TRID has been released. If you're living under a rock, you can find the release here. Keep in mind, this is only a proposed rule. So while many thing included are "clarifications" (meaning they help immediately), there are a number of new changes that won't affect us for months.
There are actually a ton of helpful things included, but how about we cover some highlights?
1) Creates a Tolerance for Total of Payments "Total of Payments" is one of those things in Loan Calculations on page 5 of the Closing Disclosure. It discloses to the borrower the total amount they'll have paid by the time they pay off the loan.
2) "Black Hole" Issue - Solved? It appears that the amendments will solve for the Black Hole issue - meaning we can feel comfortable using a Changed Circumstance with a Closing Disclosure. Good news!
3) Instructions on Piggyback Loan Disclosures It's tough to summarize in this newsletter, but suffice it to say that, if you've struggled with deciding how to disclose simultaneous second lien loans in the past, there is very likely some helpful instructions on how to do so now available.
4) Gift Funds Received Before Closing In another positive change, the proposed Rule now requires us to disclose only those cash gifts that are given at closing. Gifts that are given before closing will not be disclosed on the LE or CD. I think it's safe to interpret this as a clarification - the explanation states that the Rule is currently silent on this. So go ahead and make that change right away!
5) LE Expiration Date. Remember that the Loan Estimate expiration date is supposed to show the 10-day period that the borrower has to provide intent to proceed. Currently, we "freeze" that date on revised loan amounts, which can be confusing to a borrower. Under the proposed rule, we will simply leave that date blank.
6) Payoffs on a Purchase Loan. Now will be disclosed in Section H.
7) Late Rate Locks. We know that a revised LE is required within 3 days of rate lock (but continue to argue over whether it is required if no fees actually change). But I supposed there has been some confusion over whether we're then required to lock a loan prior to issuing a Closing Disclosure. The answer from the CFPB is No; if you happen to lock a loan after issuing a CD, that is permissible. No revised LE is required. Of course an updated CD will be required if anything changes.
There will be a lot more from this as we all digest it - hopefully more good clarifications. I'm also sure there are still unanswered questions. But this seems like a great step forward.
In Other News:
Interesting things happening on Cape Cod ... while the B&T reports that home prices are lagging behind Boston and other areas, anecdotal data reports mortgage applications are way up. Is the ripple just now reaching the Cape?
What a time to be in the Boston area - currently $7 billion in construction projects underway, according to this B&T article.
Hey if you're into underwriting, post-closing, or compliance and want a more flexible lifestyle - give us a call, we'd love to chat. :)
Ever hear of the 5-year rule for saving money? According to Forbes' writer Robert Berger:
A good rule of thumb is not to invest any money in the stock market that you'll need over the next five years. This is particularly important for those who are in retirement and relying on their investments for daily expenses.
The goal here is to avoid a situation where you have to sell stocks during a bear market in order to meet living expenses.
This rule is difficult to follow today given the extremely low yields in the bond market. But given the relatively high prices of equities, it's an important rule to follow. With at least 5-years worth of expenses out of the market, an investor is more likely to weather a bear market knowing their immediate needs are taken care of.
(On why SpaceX doesn't have patents) "We have essentially no patents in SpaceX. Our primary long-term competition is in China -- if we established patents, it would be farcical, because the Chinese would just use them as a recipe book." - Elon Musk
Thanks so much for reading our weekly newsletters. We're not always going to be perfect, but because we always do our best and try not to overpromise, we hope that we're always going to be trustworthy. Your calls and e-mails are very helpful - please keep contributing.
**These are our opinions. We're not authorized, or willing, to express those of others.**