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Thursday, June 4, 2015

TRID: State-specific Disclosures

QUESTION
Do we still have to use state law pre‐closing disclosures on or after the August 1, 2015 TRID effective date?

ANSWER
TRID does not eliminate or replace other state‐mandated disclosures. The new disclosure regime only serves to replace existing federal law requirements. The comments to RESPA’s Regulation X specifically provide that “[s]tate laws that give greater protection to consumers are not inconsistent with and are not preempted by RESPA or Regulation X.” [Regulation X § 1024.5(c)(1)]

This provision is not changed by TRID, so it remains in effect on or after August 1, 2015. Because state law disclosures are generally deemed to provide more protection for the borrower, TRID will not affect existing state‐mandated forms and procedures. For instance, states give deference to TRID with respect to the intent to proceed requirement. However, a state may provide greater protection to consumers with respect to other regulatory requirements set forth in the CFPB’s TRID rule. States are currently aligned with the CFPB regarding the intent to proceed mandate.

Thus, states permit the exception allowing a creditor or other person to impose a bona fide and reasonable fee for obtaining the consumer’s credit report, while also accepting the CFPB’s prohibition under TRID that a creditor or other person may not impose a fee on a consumer before the consumer has received the Loan Estimate and Indicated an intent to proceed with the transaction. [Regulation X § 1024.7(a)(4) and (b)(4) and TILA Regulation Z § 1026.19(a)(1)]

You should check your individual state laws and regulations to determine whether adjustments to state disclosures are planned in conjunction with TRID implementation.

Brennan Holland
Director/Legal & Regulatory Compliance 
Lenders Compliance Group