The CFPB has issued a technical correction in the supplementary information to the TRID rule, published in the Federal Register. The correction addresses an apparent oversight regarding tolerance of property taxes and similar charges paid in advance, but not into an escrow or impound account. According to the CFPB Monitor, the correction is not actually addressing the issue appropriately.
Before TRID, property taxes and similar charges that a borrower was required to pay in advance were not subject to tolerances. Unless specifically included in the 0% tolerance or 10% tolerance buckets by RESPA, fees and charges were not subject to tolerance. The TRID rule takes on the good faith standard and imposes the 0% tolerance to all fees and charges, unless given an exception. Due to an omission in the supplementary information, these charges were subject to tolerances. The correction that has been published in the Federal Register addresses the tolerance issue in the supplementary information by stating the charges paid for third party services are not required by the creditor, including property taxes, homeowner’s association dues, condominium fees and cooperative fees, and are not subject to tolerances.
It has been questioned whether or not these corrections address the actual issue. In many cases these fees are in fact required to be paid by the borrower, if due within a certain time after closing, and would therefore be subject to specified tolerance levels. The CFPB Monitor believes this issue needs to be addressed promptly through an amendment to the actual rule.