Now that it has been a little over a month since the official TILA-RESPA Integrated Disclosure (TRID) implementation date, many loan transactions are now closing which are subject to the new TRID rules and use of the TRID required forms (i.e. Loan Estimate and Closing Disclosure).
In this regard, both VA and FHA have provided some guidance to lenders as to the expectations and current review requirements for loan transactions that had loan applications taken on, or after, October 3, 2015. Outlined below is a summary of this guidance for each Agency:
VA Loan Transactions
In their Circular Letter 26-15-24, the Veterans Administration (VA) has stated that, for loan applications taken on or after October 3, 2015, the loan file MUST contain the new Closing Disclosure. The HUD-1 Form will no longer be required. Files that do not have the Closing Disclosure will be returned to the lender for proper closing documents.
The VA has revised its mandatory stacking order for purchases/cash-out refinances and interest rate reduction refinance loans (IRRRLs), to include the Closing Disclosure. The new stacking order documents are attached to the above-referenced Circular Letter as Exhibit A and Exhibit B.
Although it is clear that the VA will now require the Closing Disclosure for transactions in which the loan application was taken on and after October 3, 2015, their Circular Letter is silent on the topic of whether or not the VA will begin performing technical TRID compliance as part of their “full file reviews”.
Unlike FHA (see summary below), the VA has not yet announced if they will now be reviewing files to determine if the Closing Disclosure was provided to the applicant at least 3 specific business days prior to closing, if the final Loan Estimate was provided to the consumer at least 1 day prior to the borrower’s receipt of the Closing Disclosure or if the amounts collected at closing match (or are within the allowable tolerances) from what was disclosed to the applicant on the last bona fide Loan Estimate. In other words, will the VA also be reviewing loan files for compliance with TRID regulations? Stay tuned.
FHA Loan Transactions
In his Blog Post dated October 20, 2015, my colleague Mike Vitali, SVP – Chief Compliance Officer for LoanLogics, discussed FHA’s recent announcement that they would not be including technical TRID compliance as an element of its routine quality control reviews. This Policy Statement reflects an expiration date of April 16, 2016. FHA, however, will evaluate whether or not the correct forms were used in connection with the origination of FHA mortgages subsequent to the October 3, 2015, TRID effective date.
So, it would appear that lenders will have somewhat of a grace period for technical compliance with TRID rules & requirements from the VA and FHA for several months. But, they must begin utilizing the Loan Estimate and Closing Disclosure on transactions in which the loan application was taken on and after October 3, 2015.
Keep reading LoanLogics Blog Posts and Newsletters for more information and guidance on TRID-related topics in the coming weeks.