TRID Guidelines: The FAQs describe the criteria and disclosure requirements for two different “partial” exemptions:
1. Regulation Z exempts subordinate-lien, interest-free loans which:
- Are for homebuying assistance (downpayment, closing costs, etc.); property rehabilitation; energy efficiency; or avoiding foreclosure;
- Defer or forgive at least a portion of the loan for a set period or until/upon meeting certain conditions [see §1026.3(h)(4)]; and,
- Limit borrower-paid costs to recording fees, transfer taxes, application and counseling fees. (The total amount of application and counseling fees must be bona fide, reasonable, and less than 1% of the loan amount.)
For applications meeting these criteria, creditors can provide the Loan Estimate and Closing Disclosure or the “old” Truth in Lending Disclosure. These applications are also exempt from the Special Information Booklet requirements.
2. The Build Act, which went into effect earlier this year, provides a separate but somewhat similar exemption from the requirements to provide a Loan Estimate and Closing Disclosure. This exemption is available to nonprofits that offer interest-free mortgage loans where only bona fide and reasonable fees are charged. Such creditors may provide an “old” Truth in Lending Disclosure in place of the Loan Estimate and Closing Disclosure. Applications under The Build Act exemption; however, must also be provided a Good Faith Estimate and Settlement Statement, if the TRID disclosures (i.e., Loan Estimate and Closing Disclosure) are not provided. A Special Information Booklet is also still required.
As experts in TRID Guidelines, we understand, these are not exemptions that many of you will likely be able to utilize; however, we did want to alert you as to what was packed into the CFPB’s latest FAQ update.
TRID compliance and following TRID guidelines isn’t easy! We have a huge library of TRID-related training that’s available now OnDemand. We also have TRID webinars coming up. There’s something for everyone! Check it out today!
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