TRID – Understanding the TILA-RESPA Integrated Disclosure (“TRID”) Volume 22

11 Feb

Volume 22 – Updated Information Regarding Preparation of the Seller’s Closing Disclosure

Note: This information was originally published in TRIDBIT 19 on November 24, 2015. As implementation of the TRID Rule continues to evolve, we want to share additional information with you on this topic.

The lender insists on preparing the seller’s Closing Disclosure (CD). What do I do?

The Rule requires that the settlement agent provides the seller’s side of the CD.  If a lender is challenging the settlement agent’s right to provide the seller’s CD are they defining “provide” as handing it to the seller rather than preparing it?  One would think that the lenders would prefer to transfer the work involved to the settlement agent rather than do it themselves. 

If you are challenged with a lender insisting on preparing the seller’s CD, here are the pertinent sections in the Rule beginning on page 1740.

“19(f)(4)(i) Provision to seller.
1. Requirement. Section 1026.19(f)(4)(i) provides that, in a closed-end consumer credit transaction secured by real property that involves a seller, other than a reverse mortgage subject to § 1026.33, the settlement agent shall provide the seller with the disclosures in § 1026.38 that relate to the seller’s transaction reflecting the actual terms of the seller’s transaction.“
“19(f)(4)(ii) Timing Requirement. Section 1026.19(f)(4)(ii) provides that the settlement agent shall provide the disclosures required under § 1026.19(f)(4)(i) no later than the day of consummation.“

It’s important to make sure we know what the lender is saying in their communication as they may not be saying they want to prepare the seller-only CD in its entirety.  Remember, the lender is required to disclose any seller-paid fees that are in connection with the origination of the loan on the consumer’s CD; therefore, even in the bifurcated format some seller fees may show on the consumer-only CD.  The Rule requires the disclosure of all costs related to the borrowing of the money no matter who pays those costs:  the consumer, seller, mortgage broker, lender, etc.  As an example, if the appraisal fee is borne by the seller then it must show on the consumer’s CD in the seller’s column. The vast majority of lenders are not looking to prepare the entire seller-only CD; rather, they need to reflect the fees in accordance with the TRID Rule.

The liability for the accuracy of the numbers on the seller’s CD rests with the settlement agent. If the lender insists on preparing the entire document, be certain to obtain this instruction in writing. It would be prudent to establish a review and approval system with the lender so that the final seller’s CD is accurate.

Have the conversation with the lender early in the transaction.

This information provided is for informational purposes only and should not be used or relied upon for any other purpose. This information is not intended nor should it be construed as providing legal advice. Tradition Title Agency does not guarantee, and assumes no responsibility for, the accuracy, timeliness, correctness, or completeness of the information. Always seek the advice of competent counsel with any questions you may have regarding any legal issue.

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