New Acronym Language: IMD – TRID – AP – AIR – TIP – MIC. Do you know the new language?
June 18, 2015 – TRID rule to be postponed two months
Consumer Financial Protection Bureau Director Richard Cordray issued a statement late yesterday afternoon announcing that the Bureau will issue a proposed amendment to delay the effective date of the Know Before You Owe/TRID rule until October 1, 2015. Cordray said that the agency made the decision to postpone the effective date “to correct an administrative error” that would have “delayed the effective date of the rule by two weeks.” The statement also acknowledged that the additional two months’ lead time for implementation would “better accommodate the interests of the many consumers and providers whose families will be busy with the transition to the new school year at that time.”
Once upon a time, all bankers really needed to know was the difference between APY (Annual Percentage Yield for deposits) and APR (Annual Percentage Rate for loans). To be compliant with the new mortgage rules going into effect on August 1, 2015, one needs to get on board with the new language introduced by the CFPB (Consumer Financial Protection Board). Initially, when the new rules were introduced in 2013, they were commonly referred to as “IMDs” (Integrated Mortgage Disclosures). However, the CFPB changed that as they rolled out their support resources for TRID (TILA RESPA Integrated Disclosures). Whether you hear IMD or TRID, they’re interchangeable as the final rules for combining the Preliminary Truth in Lending Disclosure & Good Faith Estimate into the new Loan Estimate (LE) and for combining the Final Truth in Lending Disclosure and HUD1(1A) into the new Closing Disclosure (CD).
As part of the implementation, the forms include some new tables, with which users will need to become familiar. The first of those is the “AIR Table” (Adjustable Interest Rate) which will be used for ARM (Adjustable Rate Mortgage) products. This table includes such information as the Index and Margin, the Minimum/Maximum Interest Rate, Change Frequencies, and Limits on Rate Changes. If a loan has special payment features that are not related to interest rate changes, such as Interest Only Payments for a period of time, Step Payments, or Seasonal Payments, a user will include the AP Table (Adjustable Payment). This table will include information about the feature such as that related to First Change, Subsequent Change, and Maximum Payment related to the change(s). Another new calculation is the TIP Rate (Total Interest Percentage) which is a calculation of the total amount of interest paid over the loan term divided by the loan amount. This calculation is part of the “Comparison” table that will allow consumers to compare TIP rates across various institutions where they might be shopping for a mortgage.
And finally, there is the MIC# – have you heard of that one before? The CFPB thinks you have. If not, it’s one with which you will become familiar as it is a required disclosure. This is an identification number that’s included on the top right of page one of the Closing Disclosure (Loan Information table). It is the Mortgage Insurance Case Number (MIC#) that’s used to identify the mortgage insurance, when such insurance is required for high LTV (Loan to Value) loans.
The preamble to the final rules cite:
“A national settlement company commented that the label “MIC #” would be confusing to consumers. The Bureau extensively tested the integrated disclosures with consumers and did not find that the proposed label “MIC #” detracted from consumer understanding of the loan transactions. The Bureau believes that to the extent consumers do not understand the acronym, they can find such information from other sources, such as the Bureau’s Web site, the creditor’s or mortgage broker’s loan officer, the settlement agent, or real estate agents. The Closing Disclosure will contain a statement referring consumers to the Bureau’s Web site to obtain more information next to a graphic depiction of a question mark, which consumer testing conducted by the Bureau indicated drew consumers’ attention to the notice… Accordingly, the Bureau believes that consumers will have available information regarding this information in the disclosure should they have questions. For the aforementioned reasons, the Bureau is adopting § 1026.38(a)(5)(vi) as proposed. “
Oh, and by the way, inclusion of the CFPB website on the bottom of page 1 of the LE and in the “Questions” table on page 5 of the CD are also required. They will be the contact for more information or to make a complaint.
So, there you have it! Now you know the long and short (more the short) of implementing the new TRID! Should you need assistance, please contact our FOS compliance professionals to help guide you through the changes!
For additional information please contact the author Evelyn Dehmey, CRCM, CBA, CRP, AMLP at email@example.com.