COMPLIANCE HOT TOPIC TRID 2.0 - Disclosing with the “Best Information Reasonably Available”
QUESTION: Can property taxes and other charges paid to third party service providers for services not required by the creditor fall within the zero tolerance bucket along with the creditor’s fees and the appraisal? ANSWER: Yes. Buried in TRID 2.0 was a clear warning from the CFPB that creditors must ensure that they always disclose with the “best information reasonably available.” Failure to do so could result in charges, such as property taxes and the buyer’s attorney fee, being subject to the zero-tolerance standard. Under TRID 2.0, the CFPB revised its comment located in 1026.19(e)(3)(iii)-3 as follows:
Good faith requirement for property taxes or non-required services chosen by the consumer. Differences between the amounts of estimated charges for property taxes or services not required by the creditor disclosed under § 1026.19(e)(1)(i) and the amounts of such charges paid by or imposed on the consumer do not constitute a lack of good faith, so long as the original estimated charge, or lack of an estimated charge for a particular service, was based on the best information reasonably available to the creditor at the time the disclosure was provided. For example, if the subject property is located in a jurisdiction where consumers are customarily represented at closing by their own attorney, even though it is not a requirement, and the creditor fails to include a fee for the consumer's attorney, or includes an unreasonably low estimate for such fee, on the original estimates provided under § 1026.19(e)(1)(i), then the creditor's failure to disclose, or unreasonably low estimation, does not comply with § 1026.19(e)(3)(iii). Similarly, the amount disclosed for property taxes must be based on the best information reasonably available to the creditor at the time the disclosure was provided. For example, if the creditor fails to include a charge for property taxes, or includes an unreasonably low estimate for that charge, on the original estimates provided under § 1026.19(e)(1)(i), then the creditor's failure to disclose, or unreasonably low estimation, does not comply with § 1026.19(e)(3)(iii) and the charge for property tax would be subject to the good faith determination under § 1026.19(e)(3)(i).
This means that if a creditor fails to disclose altogether or discloses an unreasonably low fee for the borrower’s personal attorney or real estate taxes, these charges would need to be placed in the zero tolerance bucket and any increase in the amount disclosed would require a cure by the creditor. While the CFPB limited the commentary to these two examples, it could be expected that this situation could apply to any fee not disclosed with the best information reasonably available.
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