Translating TRID: Why Lenders Need Seller’s Information

Since TILA RESPA Integrated Disclosure Rule has been enacted, Real Estate Professionals are still having trouble interpreting and adopting certain aspects of the new law. It has been particularly challenging to make sense of the new rules regarding sharing and disclosing Non-Public Private Information (NPI) of the consumers involved in the transaction. As you might have seen from our blog post earlier this week, Real Estate Agents often run into obstacles when trying to access the Closing Documents of their clients in order to review them for accuracy. The reason for this is because TRID is much more stringent about allowing outside parties to see the buyers’ and sellers’ NPI. However, buyers have the option to grant their Real Estate Agents access to their Closing Documents simply by filling out an Authorization to Release Information form.

On the flip side of this issue are lenders who issue mortgage loans to the buyers. According to TRID, these lenders must see the seller’s Closing Disclosure, in addition to the buyer’s, to make sure the information in both documents matches up. Despite that, lenders have been having occasional difficulties obtaining the seller’s Closing Disclosure. Certain title and settlement agents refuse to disclose the seller’s information, mistakenly believing that TRID prohibits lenders from accessing it.

However, the fact is that under TRID, title and settlement agents must provide the sellers’ information to the lender. TRID allows for seller information to be provided on the borrower’s Closing Disclosure or on a separate, seller’s version of the Closing Disclosure that will not be provided to the buyer. Specifically, section 1026.38(t)(5)(v) and (vi) allows for separation of borrower and seller information onto separate Closing Disclosures for privacy reasons. Lenders not only have to receive the seller’s Closing Disclosure, they are required to retain this document by the CFPB. Examiners will expect to see this document in the lender’s file.

Because lenders are liable for the accuracy of the information on the Closing Disclosure under TRID, they use the copy of the seller’s Closing Disclosure to cross-verify this information between the seller’s and buyer’s versions of the document. They must also reconcile with any other ALTA Settlement Statement or disbursement documents used by the settlement agent.