Compliance Blog

Happy Belated TRID 2.0 Mandatory Compliance Deadline

Written by David Park, Regulatory Compliance Counsel, NAFCU

Hi everyone.  My name is David, and I am a new member of the Regulatory Compliance team here at NAFCU.  I look forward to meeting some of you in person next week at Regulatory Compliance School down in San Antonio, but for now my first blog entry will have to suffice.  In honor of the recent mandatory compliance deadline for TRID 2.0, I wanted to write about statutory damages and errors in a Loan Estimate (LE) or Closing Disclosure (CD).  The NAFCU Compliance team occasionally receives questions on TRID liability, but the statutory provision requires a lot of cross-referencing to find out when statutory damages are available.  Hopefully the graphic below will provide some clarity.

Section 130 of the Truth in Lending Act (TILA) contains the civil liability provisions applicable to TRID, or at least the portions of TRID that give rise to damages under TILA, and paragraph (a)(2) of section 130 describes the kinds of statutory damages that are available.  But how can a credit union determine which provisions in the LE and CD could give rise to statutory damages under TILA?  Part of the answer lies in the unnumbered paragraph following paragraph (a)(4) of section130: 

In connection with the disclosures referred to in section 128, a creditor shall have a liability determined under paragraph (2) only for failing to comply with the requirements of section 125, of paragraph (2) (insofar as it requires a disclosure of the ‘‘amount financed’’), (3), (4), (5), (6), or (9) of section 128(a), or section 128(b)(2)(C)(ii), of subparagraphs (A), (B), (D), (F), or (J) of section 128(e)(2) (for purposes of paragraph (2) or (4) of section 128(e)), or paragraph (4)(C), (6), (7), or (8) of section 128(e), or for failing to comply with disclosure requirements under State law for any term which the Bureau has determined to be substantially the same in meaning under section 111(a)(2) as any of the terms referred to in any of those paragraphs of section 128(a) or section 128(b)(2)(C)(ii).

All of these internal cross-references are challenging to unpack.  Another part of the answer is left unsaid in the unnumbered paragraph following section 128(a)(4): Violations of provisions in Chapter 2 of TILA – sections 121-140A – that are not specifically mentioned in that unnumbered paragraph can also give rise to statutory damages.

So you now have a sense of what will give rise to statutory damages, but how does a credit union determine whether a particular error on a LE or CD will give rise to statutory damages under section 130(a)(2)?  One resource is the BCFP.  The BCFP provides annotated blank LE and CD forms that contain TILA citations, where appropriate, for each of the fields.  A credit union will want to consult with local counsel about the accuracy of the blank forms provided by the BCFP, but these forms provide a starting point for credit unions to assess the potential liability risk under TILA associated with a particular error in an LE or CD. 

And now, the chart.

TILA Section Associated with LE/CD Field

LE/CD Location of Disclosure for Annotated Forms Provided by the BCFP

Information Disclosed

Are Statutory Damages Under Section 130(a)(2) Available?

128(a)(1)

LE: Page 1 above “Loan Estimate” heading; Page 3 field for Lender

CD: Page 1 in Transaction Information box; Page 5 field for Contact Information – Lender

Identity of Creditor

No

128(a)(2)

LE: Page 1 fields for Loan Term, Loan Terms, and Projected Payments

CD: Page 1 fields for Loan Term, Loan Terms, and Projected Payments; Page 5 field for Loan Calculations – Amount Financed

Amount Financed

Yes

128(a)(3)

LE:

CD: Page 5 field for Loan Calculations – Finance Charge

Finance Charge

Yes

128(a)(4)

LE: Page 3 field for Comparisons – Annual Percentage Rate

CD: Page 5 field for Loan Calculations – Annual Percentage Rate

Annual Percentage Rate

Yes

128(a)(5)

LE: Page 3 field for Comparisons – In 5 Years

CD: Page 5 field for Loan Calculations – Total of Payments

Total of Payments (Sum of the Amount Financed and the Finance Charge)

Yes

128(a)(6)

LE: Page 1 fields for Loan Terms

CD: Page 1 fields for Loan Terms

Number, Amount, and Due Dates or Period of Payments Scheduled to Repay the Total of Payments

Yes

128(a)(8)

LE: Page 3 fields for Comparisons – In 5 Years and Comparisons – Annual Percentage Rate

CD: Page 5 fields for Loan Calculations

Descriptive Explanations of the Amount Financed, Finance Charge, Annual Percentage Rate, and Total of Payments

No

128(a)(9)

LE:

CD: Page 4 field for Loan Disclosures – Security Interest

Statement that a Security Interest Has Been Taken in Certain Property

Yes

128(a)(10)

LE: Page 3 field for Other Considerations – Late Payment

CD: Page 4 field for Loan Disclosures – Late Payment

Charge or Percentage for Late Payment Fee

No

128(a)(11)

LE: Page 1 field for Prepayment

CD: Page 1 field for Prepayment

Whether Consumer Is Entitled to a Rebate of any Precomputed Finance Charge upon Refinancing or Prepayment

No

128(a)(12)

LE:

CD: Page 4 field for Loan Disclosures – Demand Feature; Page 5 field for Other Disclosures – Contract Details

Statement Advising Borrower to Refer to Loan Documents For Information About Nonpayment, Default, the Right to Accelerate. And Prepayment Rebates and Penalties

No

128(a)(13)

LE: Page 3 field for Other Considerations – Assumption

CD: Page 4 field for Loan Disclosures – Assumption

Whether the Loan May Be Assumed

No

128(a)(15)

LE:

CD: Page field for Other Disclosures – Tax Deductions

Tax Consequences When Extension of Credit Exceeds Fair Market Value of Property

No

128(a)(16)

LE: Page 1 fields for Projected Payments and Estimated Taxes

CD: Page 1 field for Projected Payments and Estimated Taxes

Variable Rate Loan with Escrow – Monthly Payments

No

128(a)(17)

LE: Page 2 fields for Loan Costs, Other Costs, and Calculating Cash to Close; Optional Page 2 field for Calculating Cash to Close

CD: page 2 fields for Closing Cost Details; Page 3 field for Calculating Cash to Close; Optional Page 2 field for Calculating Cash to Close

Aggregate Amount of Settlement Charges for All Settlement Services, Amount of Charges that Are Included in the Loan and Amount of Those Charges Paid At Closing, Approximate Amount of Wholesale Rate of Funds in Connection with the Loan, and Aggregate Amount of Other Fees or Required Payments in Connection with the Loan

No

128(a)(18)

LE: Page 2 field for Origination Charges

CD: Page 2 field for Origination Charges

Aggregate of Fees Paid to Mortgage Originator

No

128(a)(19)

LE: Page 3 field for Comparisons – Total Interest Percentage

CD: Page 5 field for Loan Calculations – Total Interest Percentage

Total Amount of Interest Paid Over the Life of the Loan as a Percentage

No

128(b)(2)(B)(i)

LE: Page 3 field for Confirm Receipt

CD: Page 5 field for Confirm Receipt

Statement That Consumer is Not Obligated to Complete Loan

No

128(b)(2)(C)

LE: Page 1 field for Projected Payments; Page 2 Adjustable Payment Table and Adjustable Interest Rate Table

CD: Page 1 field for Projected Payments

Variable Interest Rate Disclosures

No

128(b)(2)(C)(ii)

LE: Page 1 field for Product and Loan Terms; Page 3 field for Other Considerations – Refinance

CD: Page 1 fields for Product and Loan Terms; Page 4 fields for Adjustable Payment Table and Adjustable Interest Rate Table; Page 5 field for Other Disclosures – Refinance

Variable Interest Rate Disclosures – Examples of Adjustments

Yes

128(b)(4)

LE: Page 1 fields for Projected Payments and Estimated Taxes

CD: Page 1 field for Projected Payments and Estimated Taxes

Escrow Should Be Part of Number, Amount, and Due Dates or Period of Payments Scheduled to Repay the Total of Payments

No

129B(b)(1)(B)

LE: Page 3 fields for NMLS ids for Lender, Mortgage Broker, and Loan Officers

CD: Page 5 fields for Contact Information

NMLS Identifier for Mortgage Loan Originator

Yes

129C(f)

LE:

CD: Page 4 field for Loan Disclosures – Negative Amortization

Negative Amortization

Yes

129C(g)

LE: Page 3 field for Other Considerations – Liability after Foreclosure

CD: Page 5 field for Other Disclosures – Liability after Foreclosure

Anti-Deficiency Notice

Yes

129C(h)

LE:

CD: Page 4 field for Loan Disclosures – Partial Payments

Policy Regarding Acceptance of Partial Payments

Yes

129D(h)

LE:

CD: Page 4 field for Loan Disclosures – Escrow Account

Disclosures For Mandatory Escrow

Yes

129D(j)

LE:

CD: Page 4 field for Loan Disclosures – Escrow Account

Disclosures for Escrow Waiver

Yes

129H(c)

LE:

CD: Page 5 field for Other Disclosures – Appraisal

Free Copy of Appraisal

Yes

129H(d)

LE:

CD: Page 5 field for Other Disclosures – Appraisal

Consumer Notification Regarding Appraisal

Yes

Please contact us if you have any questions about the chart or just to say hello.  I will be heading on a long-delayed vacation between now and my next post, but I promise to share some pictures next time.

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Programming Note.  NAFCU will close at noon today and be closed on Monday for the holiday weekend. We will be back to blogging on Wednesday.

NAFCU's compliance attorneys will be in San Antonio, Texas, next week at the fall session of Regulatory Compliance School and the 2018 Regulatory Compliance Seminar.   We appreciate your patience as your compliance questions will be answered, but our replies might be slightly delayed with the time difference.

Enjoy your weekend!

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