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Elimination of the TRID Black Hole - Other Considerations

Q: I understand that the Consumer Financial Protection Bureau (the "CFPB") recently eliminated the TRID Black Hole. Does this mean lenders can provide the Closing Disclosure ("CD") to borrowers earlier in the origination process?

A: In late April 2018 the CFPB issued the Black Hole final rule, thereby eliminating one of TRID's major annoyances to lenders. Lenders may now reset tolerances on any CD at any time regardless of the number of business days prior to closing that the change occurred. Prior to this amendment, TRID did not permit lenders to use a CD to cure a tolerance violation if there were four or more days between the time the revised disclosures are required to be provided and consummation of the loan.

In issuing the amendment, the CFPB noted that commenters were concerned that the amendment would cause lenders to provide the initial CD very early in the transaction. Addressing these concerns, the CFPB stated that it believes that the existing accuracy standard for the CD will prevent lenders from providing the initial CD too early in the process. The CFPB reiterated that the applicable accuracy standard for information required on the CD is the "best information reasonably available," which requires lenders to perform "due diligence" in obtaining accurate information to be placed on the CD.

Based on the language in the amendment lenders should be very careful to ensure each and every CD issued contains the "best information reasonably available" at the time of issuance. Providing an initial CD which is missing information and subsequently providing a final CD which includes such information is not compliant with the terms of the statute.

The Black Hole final rule is available at the following link: https://www.consumerfinance.gov/about-us/newsroom/bureau-consumer-financial-protection-finalizes-amendment-know-you-owe-mortgage-disclosure-rule/.

The amendment will be effective on June 1, 2018 and will be available for loans in process as of that date as well as applications taken after such date.

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