The Community Home Lenders Association has called for a formal “hold harmless” provision in the TRID requirements that would avoid punishing originators in cases of delayed closings.
“Specifically, when a borrower makes a request to delay the closing after the Closing Disclosure has been made, but more than seven business days before the new closing date … there is no apparent legal way for the lender to disclose an increase in costs; for example, in conjunction with a loan lock extension fee,” the CHLA said, according to HousingWire. “The timing of the requirements could create a Black Hole.”
And while industry players have been spending months in preparing for the upcoming “Know Before you Owe” rule, they agree a grace period is necessary.
“We’re ready for the changes but, having said that, not having any leeway with the changes is not as realistic as I’d like it to be,” Michael Baralt, an originator with Hamilton Group, told Mortgage Professional America. “It’s a bit overkill.”
According to the CHLA, the loan estimate cannot be revised after the closing disclosure under TRID guidelines.
“If the change in circumstances occurs more than seven business days before consummation, there are concerns that a lender cannot effectively comply with both the requirement to provide the revised Closing Disclosure (in lieu of a revised Loan Estimate) within three business days of the change and provide it within four business days of consummation,” the CHLA said.
The association has asked the CFPB to provide more clarity on how lenders and originators handle any document changes that may be required.
“We do not believe that TRID rules are intended to put lenders and borrowers in such a situation where loan changes or closing extensions are rendered problematic and lenders may have to absorb increased costs incurred as a result of a borrower’s actions or requests,” the CHLA said in its letter.
The TRID disclosure rule goes into effect on October 3.
An industry association is renewing its call for a TRID grace period, arguing leniency is needed while originators acclimatize themselves to the new rules, especially those surrounding client document change requests.