Wholesale lenders should learn new disclosure requirements to avoid liability issues
Editor’s Note: In the time since this article was written and published, the Consumer Financial Protection Bureau (CFPB) has changed the effective date for TRID. The new effective date is Oct. 3.
The new Truth in Lending Act and Real Estate Settlement Procedures Act Integrated Disclosure (TRID) rules will have a significant impact on wholesale lending arrangements and the liability assigned to wholesale lenders. Wholesale lenders should pay careful attention to the new requirements, because TRID regulations impose assignee liability on wholesale lenders, including civil liability.
TRID combines certain good faith estimate disclosure requirements previously imposed by the Real Estate Settlement Procedures Act (RESPA) with the Truth-in Lending Act (TILA) disclosure requirements, giving consumers the right to bring individual claims against wholesale lenders for violating disclosure requirements. Thus, wholesale lenders will not only need to contend with government claims for potential disclosure requirement violations, but they also may be subject to individual borrower claims. This combination of fines and claims could bury wholesale lenders in paperwork and cause huge headaches if they are not prepared for the Aug. 1 deadline. The problem for wholesale lenders is that they can be held liable for improper disclosures whether they are produced in-house or through affiliated broker relationships.
ABOUT DANIELLA CASSERES
Daniella Casseres focuses her practice on laws and regulations governing mortgage lenders, mortgage brokers, financial institutions and consumer finance companies.
She also works closely with the firm’s affiliate company, Strategic Compliance Partners. She advises these clients on state and federal compliance laws and regulations including, TILA, RESPA, FHA, SAFE Act, FCRA, GLBA, Privacy Act, and BSA requirements.
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