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TRID “Black Hole” Fix Effective June 1, 2018

5/22/2018

The Consumer Financial Protection Bureau (CFPB) recently finalized a long-awaited amendment to its TILA/RESPA Integrated Disclosure (TRID) rules which addressed a technical issue involving the timing requirements for a revised Closing Disclosure (CD), commonly referred to as the "black hole."  This change is effective June 1, 2018.

Currently, the "black hole" limits a lender's ability to reset fee tolerances using a revised CD if it the revised CD is issued more than four business days prior to closing.  Particularly in situations where the loan closing has been delayed, the "black hole" has resulted in lenders being forced to absorb fee increases that would otherwise have been legitimately passed on to the borrower.

The amendment removes this four business day limit on a lender's ability to reset fee tolerances with a revised CD.  Now, if a changed circumstance or other triggering event has occurred, the rules allow a lender to reset fee tolerances with either an initial or corrected CD, regardless of the number of days between consummation and the date the CD is required to be provided to the borrower.  This amendment gives lenders more flexibility and eliminates a TRID "bug" that industry participants have been burdened with for years.

Please keep in mind that the lender must still provide the revised disclosure at or before consummation and within three business days of receiving information establishing the changed circumstance.  Finally, the borrower must still receive the initial CD at least three business days prior to consummation. 

An Executive Summary of the rule can be found here, while the Final Rule can be accessed here