The Consumer Financial Protection Bureau (CFPB) has announced a technical change to its October 2015 "Know Before You Owe" mortgage disclosure rule.  The change to what is generally known as the TILA-RESPA Rule or "TRID' relates to when a creditor may compare loan closing-related charges paid by or imposed on the consumer to the amounts disclosed on a Closing Disclosure as opposed to a Loan Estimate, in order to comply good faith rules.

When TRID originally went into effect it was accompanied by new Loan Estimate and Closing Disclosure forms that are provided to consumers when they apply for and close on a loan. Under the rule, an estimated closing cost is disclosed in good faith if the charge paid by or imposed on the consumer does not exceed the amount originally disclosed, subject to certain exceptions or tolerances.  Lenders can make these limited changes by providing revised estimates, usually on a Loan Estimate, but in some cases the Closing Disclosure.  The rule requires creditors to deliver or place in the mail the Loan Estimate no later than three business days after the consumer submits a loan application and to ensure that consumers receive the Closing Disclosure at least three business days before closing.

However, under the current rule, circumstances may arise in which a cost increases, but the creditor has already provided a Closing Disclosure to the consumer.  The TRID rules about timing disclosures can make providing a new disclosure impossible while meeting the closing date.  This has been referred to in industry as a "gap" or "black hole" in the TILA-RESPA Rule.

CFPB says it understands that this gap has led to uncertainty in the market and created challenges to implementation that have had consequences for both consumers and creditors.  If creditors cannot pass increased costs on to specific consumers they may price their products with added margins, spreading the costs to all consumers.  Some creditors may also be denying applications after providing the Closing Disclosure in cases where they could not pass otherwise permissible increases to the affected borrowers.

In July 2017 CFPB proposed an amendment removing that particular timing restriction and opened public comment.  It received 43 unique comments from industry commenters (including trade associations, creditors, and industry representatives), a consumer advocate group, and others and, after considering public comment on the proposal, is finalizing that amendment which will take effect 30 days after its publication in the Federal Register.  

The final rule is available at: