SFA Publishes TRID Grid 4.0
article by Structured Finance Association
On February 16, SFA published the fourth iteration of the TRID Compliance Review Scope. The latest version was crafted by SFA’s Third-Party Review/Due Diligence Working Group and is an update of the uniform testing standards for purchasing mortgage loans subject to TILA-RESPA Integrated Disclosure (TRID) Rules. The scope is a combination two regulations: the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA).
TRID Rules were developed by the Consumer Financial Protection Bureau (CFPB) and went into effect for loan applications beginning in 2015. The regulation aims to increase transparency to borrowers in understanding the loan terms, loan features, and charges as they consider different mortgage loan options. TRID Grid 4.0 reflects evolving industry consensus views on TILA liability interpretations and best practices that drive the diligence conducted by TPRs on loans. The updated version is a product of market collaboration among TPR firms, RMBS issuers, and rating agencies.
The latest version of the TRID Grid and the subsequent three versions published since 2016 are based upon informal guidance from the CFPB and legal precedent from several court decisions. The primary alterations to this iteration clarify and update certain sections including disclosure timing, escrow considerations, remediation requirements, among others. Additionally, there is an inclusion of an appendix that outlines real world examples and scenarios to support the latest clarifications.