The TILA/RESPA Integrated Disclosure Rule (TRID) was officially implemented on October 3rd, affecting numerous areas of the mortgage origination process – including real estate appraisals. How does TRID’s enactment actually affect the appraisal industry?
As of October 3rd, the GFE and HUD-1 forms have been replaced with the new Loan Estimate and Closing Disclosure forms. Appraisal fees can no longer be charged, nor can credit card information be collected, prior to the borrower’s confirmation that they intend to proceed with the loan after the issuance of this new Loan Estimate form – which must be delivered to the borrower within 3 days of application.
Because the appraiser’s service is not one that the borrower can shop around for, appraisal fees have been included within the Consumer Financial Protection Bureau’s (CFPB) zero tolerance section and cannot differ between the Loan Estimate and Closing Disclosure forms. This means that an appraisal fee can no longer be increased unless there is a valid “change in circumstance” – such as if an appraisal was ordered for a single-family residence per information provided by the borrower, but in actuality, it’s a condo.
Once the Loan Estimate form has been issued to the borrower, TRID doesn’t qualify the discovery of additional appraisal complexities as a valid “change in circumstance”, meaning the appraisal fee cannot be re-disclosed in these circumstances. Even with more costly situations that are obvious from the onset—such as rural assignments—standard up-charges are now also ruled out, because TRID doesn’t qualify such a situation as a valid “change in circumstance” due to the fact that the property address was known beforehand.
For more information on this new mandate, check out the CFPB’s TRID resource webpage.