Pub. 5 2017 Issue 3

Issue 3. 2017 23 assistance loans that satisfy six criteria, and Regulation X provides a similar exemption. One of the criteria limits the costs that may be paid by the borrower without loss of eligibility for the partial exemption, and the final rule broadens these costs. Transfer taxes, recording fees, application fees, and housing counseling fees may now be paid by the borrower, and recording fees and transfer taxes are also excluded from the 1-percent cap on total costs payable by the borrower. Further, it hadn’t been clear whether the lender was allowed to provide TRID disclosures even if the six criteria of the exemp- tion had been met. The new rule generally says the answer is yes. Assuming the loan meets the six criteria, the lender may provide either the general TIL disclosures or a compliant LE and CD, and does not need to provide the special information booklet, GFE, or HUD-1. Settlement service provider list Besides these new provisions, the final rule also clarifies several other existing areas of concern. One is whether to apply the 10 percent tolerance level when the bank actual- ly allowed the borrower to shop for a service, but failed to include the service on the settlement service provider list (SSPL). The final rule allows the bank to do so as long as it actually allows the borrower to shop; if it doesn’t, then the 0 percent tolerance applies. How does the bank prove that it allowed the borrower to shop though? Somewhat unhelpful- ly, the CFPB simply says that it depends “on all the relevant facts and circumstances” in each case. As we know, if the bank wants to apply “shopping tolerance levels” to settlement charges, it has to provide an SSPL listing the services it requires and for which the borrower can shop. For example, if the bank requires lender’s title insurance and allows the borrower to shop for it, the creditor has to disclose the lend- er’s title insurance on the Loan Estimate, and include it on the SSPL with at least one available provider. But what about fees that the lender doesn’t require, but the title company does? The final rule makes clear that the bank is not required to provide a detailed breakdown of all related fees that are not directly required by the bank, like a notary fee, title search fee, or other administrative services needed to provide the service required by the lender. What about everything else? As important as what the final rule does clarify, however, is what it doesn’t. Yes, we’re talking about the infamous “black hole” problem. Instead of tackling the really tough issues like this one, the CFPB punted and issued a new proposal to request additional comments on it instead. If you’ve been lucky enough to not yet encounter this, a timing issue arises when the bank has to reset tolerances on the Closing Disclo- sure, but closing has also been delayed. The new proposal would allow the bank to reset tolerances on the Closing Disclosure regardless of when closing is scheduled. The CFPB seeks comments on whether allowing this might have other undesired effects, and the deadline for submitting these is 60 days after publication in the Federal Register. While we still have to wait on a verdict for the black hole problem, there is a laundry list of other changes and clari- fications that are worth reviewing in the final rule, includ- ing Calculating Cash to Close calculations, construction loan disclosures, escrow closing notices, partial payment disclosures, and several technical corrections. Find the full rule here: http://files.consumerfinance.gov/f/docu- ments/201707_cfpb_Final-Rule_Amendments-to-Feder- al-Mortgage-Disclosure-Requirements_TILA.pdf n Victoria E. Stephen serves as Associate General Counsel for Compliance Alliance. While receiving her Bachelor of Business Administration in Banking Finance from the Mc- Combs School of Business, Victoria worked in both deposit and lending services. She continued her interest in financial services at the University of Texas School of Law by focusing on secured transactions, taxation, contracts, and corporate governance. Victoria has since worked in corporate tax law, mergers and acquisitions, and performed legal research on a range of regulatory issues. As one of our hotline advisors, Victoria helps Compliance Alliance members with a variety of compliance and regulatory questions. While we still have to wait on a verdict for the black hole problem, there is a laundry list of other changes and clarifications that are worth reviewing in the final rule.