TILA/RESPA Integrated Disclosure (TRID)

Choosing the Best TRID Pricing & Disclosure Method

The implementation of the TILA-RESPA Integrated Disclosure Rule (TRID) has raised many questions on how to correctly disclose credit reporting fees. Because of wide variances in cost between borrowers and a zero-tolerance provision, it is important to have a consistent compliance method. To assist in selecting among TRID compliant methods, we’ve compiled a list of frequently asked questions. This is provided for general information purposes and is not legal advice. As with any legal/compliance issue, you should consult counsel qualified in your venue.

UPDATE 6/15/2016: All change requests received to date have been processed. Accounts not indicating a preference have been transitioned to the Inclusive method (this method provides the lowest total costs for most lenders).

FAQ's

Both models dollar-cost-average all costs into a standard fee allowing for a known total cost to the borrower at the inception of the application. This allows you to standardize the Loan Estimate and Closing Disclosure amounts with the same amount being collected from every borrower at closing.
While both the Upgrade and Inclusive methods use cost averaging to provide a standard fee for all buyers, the best choice is determined by your specific operating procedures. The Inclusive Method bundles all costs in a simple, single fee. This is the most often selected choice and is typically the most cost-effective for lenders that regularly submit all credit reports through FNMA/FMAC for pricing or an underwriting decision. The Upgrade Method breaks the fees into two groups and is best suited only for lenders that review the credit report to determine viability before submission to FNMA or FMAC. This provides out-of-pocket cost savings on borrowers that are determined to be non-viable at the start of the loan process. When you move forward with the loan by submitting it to a GSE for underwriting/pricing, an upgrade fee applies.
YES, TRID Loan Estimate requirements cover all loan costs associated with the transaction without reference to which particular party might pay for the service. See 12 CFR 1026.37(f). Even though another party may ultimately pay for a particular fee, you’re required to show the consumer the actual costs of the transaction for shopping/comparison purposes and to illustrate the value of any credit.
In addition to the risk of being out-priced by competitors, estimating not based on “the best information reasonably available at the time” could lead to a costly compliance violation under TRID and UDAAP. Creditors that under or over-estimate at all can face significant monetary penalties for violating TRID, especially if they can’t prove their estimates were based on the “best information available at the time.” The CFPB can inflict fines starting at $5,000 per day for noncompliance and rising as high as $1 million for “knowing” violations. A recent CFPB release of examination procedures for originators indicates UDAAP is something the agency will be specifically watching for. Creditors over or under-estimating on a regular basis could additionally find themselves in violation of the prohibition on Unfair, Deceptive or Abusive Acts and Practices in the Dodd-Frank Act, which the bureau enforces.
Mortgage Preflight is available with both options—the difference lies in the services which the buyer prepays for at the time of the Mortgage Preflight transaction. Mortgage Preflight using the TRID Upgrade Method—the prospective borrower(s) prepay only the Tri-Merge fee. Should the loan proceed and be submitted to a GSE, the lender then incurs the Upgrade fee, which is later collected at closing. Mortgage Preflight using the TRID Inclusive method—the prospective borrower(s) prepay the entire credit reporting fee, thus, eliminating the vast majority of the lenders credit reporting expenses. As an added benefit, the Preflight Authentication fee is now included in both TRID pricing methods. Total costs are the same for all transactions regardless of origination through Mortgage Preflight or traditional means.
Yes, there are costs that due to Federal regulations cannot be included in TRID pricing. These include services covered under the Credit Repair Organizations Act (CROA) such as credit re-scoring and the costs of certain credit analysis tools including the CreditXpert Credit Analyzer. In addition, any fees charged by creditors to obtain trade line updates, applicable State taxes and rush fees are excluded. A complete list of inclusions and exclusions is provided here.
A detailed explanation of costs and plan inclusions is available on the TRID Pricing Election Overview
Generally no, not if you are collecting the fee from the prospective borrower prior to issuance of the Loan Estimate—under TRID (12 C.F.R. § 1026.19(e)(2)(i)(A)) you are prohibited from collecting any fee other than a reasonable credit report fee prior to application and issuance of the Loan Estimate.
Make your selection on the TRID Pricing Election Webpage. You will receive an immediate email confirming your selection. Your account will be updated within 72 hours and a second confirmation email. Be sure to adjust all applicable disclosure forms (TRID LE, CD…) to reflect the new costs.
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