Third Time’s the Charm? Key Takeaways From the Updated TRID FAQs

Financial Services Law

On July 31, the Consumer Financial Protection Bureau (CFPB or Bureau) issued a third update to its TILA-RESPA Integrated Disclosure (TRID) FAQs, providing new questions and answers regarding giving loan estimates to consumers.  The CFPB’s FAQs are informal written guidance from the Bureau about the TRID rule that helps clarify aspects of the rule for creditors.

What happened

The CFPB issued its initial TRID FAQs this past January and provided additional FAQs in May.  Past updates have discussed corrected closing disclosures and the three-business-day waiting period before consummation, as well as application of the rule to construction loans.  This most recent update provides answers to five questions regarding timing for the provision of loan estimates, and whether and what kind of additional information can be sought by a creditor before issuing a loan estimate.

The FAQs confirm that, under the TRID rule, a creditor must provide a loan estimate within three business days of the consumer submitting the following six pieces of information:

  1. The consumer’s name;
  2. The consumer’s income;
  3. The consumer’s Social Security number to obtain a credit report;
  4. The property address;
  5. An estimate of the value of the property; and
  6. The mortgage loan amount sought.

The FAQs reiterate that creditors cannot require consumers to submit additional information aside from the six pieces of information above and cannot require consumers to submit verifying documents in order to receive the loan estimate.  The FAQs note that a consumer’s purpose in submitting the six pieces of information, for example, for pre-approval or pre-qualification, is not relevant for determining whether the creditor has an obligation to provide a loan estimate.  Rather, once the consumer submits the six pieces of information to the creditor, the creditor’s obligation to provide the loan estimate is triggered under the TRID Rule.  Finally, the FAQs clarify that while TRID does not prohibit a creditor from requesting additional information beyond the six data points noted above or additional verifying documents, creditors may not condition provision of a loan estimate on receipt of this additional information from a consumer.

Why it matters

Although these FAQs reiterate in large part guidance already provided elsewhere by the CFPB, they also make clear the Bureau’s expectations regarding the provision of loan estimates.  Creditors who receive application information from consumers for mortgage loans should ensure that they do not receive all six pieces of information if they are not prepared to issue a loan estimate, and, conversely, should ensure that a loan estimate is issued if all six pieces of information are received.  The updated FAQs also show that creditors continue to have questions about and experience challenges in complying with the rule long after its adoption.