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TILA-RESPA Integrated Disclosures (TRID) mostly affects lenders and borrowers, but it can also affect the appraiser’s ability to increase their fees relative to the initial fee disclosed in the Loan Estimate, if there’s not a valid ‘change of circumstance’. With TRID potentially adding up to two more weeks to the closing timetable, there are a few things lenders and appraisers can do to help make this a smoother and timely process.
Lenders may include appraisal-related questions in the application process and potentially thwart the expense of incurable Loan Estimate (LE) under-disclosures and delays relating to re-disclosures. The lender could incorporate this into their best practices.
Here are a few suggested questions that lenders may pose to borrowers during the application process:
Several appraisal profession experts propose a programmed overestimation of the valuation fee, with the overage amount being refunded to the borrower once costs are finalized without additional expense to the appraiser.
Guidance from global information services company, Wolters Kluwer, states on their website that this approach may not be in compliance with TRID.
“Keep in mind there is still an expectation that your estimates be consistent with the best information you have available at the time of disclosure. Over disclosing to create a “cushion” may be frowned upon by your regulator and not considered in compliance with the spirit of the law.”
Further guidance by the BuckleySandler Law Firm, LLP, reiterates the above in their online TRID Resource Center. Partner Ben Olson, the former deputy assistant director for the CFPB’s Office of Regulations, advises “The Bureau has said that deliberately ‘padding’ or over-disclosing is not disclosing the best information reasonably available. Instead, you should be looking to your own experience in that particular jurisdiction as to what things typically cost… [to] have information that allows you to provide a good faith estimate. But deliberately highballing it, in addition to creating a competitive issue, could put you out of compliance.”
PEMCO Limited will stay abreast of all regulatory developments regarding TRID’s effect on the appraisal profession.
This article is being provided as informational purposes only and is not intended for legal advice. Please consult with your compliance officer or legal counsel for guidance on your company’s policy with regard to what constitutes a valid ‘change of circumstance’.
Wolters Kluwer. Frequently Asked Questions (FAQs)
BuckleySandler, LLP. Know Before You Owe TRID Resource Center