Fannie Mae and Freddie Mac Issue TRID Advisories
By Anna DeSimone
October 6, 2015, Fannie Mae issued LL-2015-06: Information Related to Know Before You Owe TILA-RESPA Integrated Disclosures. The letter was sent to all Single Family Sellers at the direction of the Federal Housing Finance Agency. Also on this date and at the direction of the FHFA, Freddie Mac issued an Industry Letter to Sellers and Servicers with the same title.
Fannie Mae LL-2015-06 is reproduced below:
Information Related to Know Before You Owe TILA-RESPA Integrated Disclosures
Fannie Mae recognizes that many lenders and their partners in the mortgage industry have undertaken considerable technological and operational changes in order to meet the requirements created by the Consumer Financial Protection Bureau’s Know Before You Owe TILA-RESPA Integrated Disclosure (TRID) rule, which went into effect October 3, 2015. Fannie Mae recognizes and appreciates the enormous efforts that its lenders have made to date.
Fannie Mae is aware that some lenders continue to address the implementation of TRID’s technical requirements. In recognition of this, until further notice, Fannie Mae will not conduct routine post-purchase loan file reviews for technical compliance with TRID; however, consistent with current practices, Fannie Mae will evaluate whether the correct forms were used in connection with the origination of a mortgage loan. After a transitional period, Fannie Mae will consider whether to begin such reviews for technical compliance; any such measures will be announced before being implemented.
Fannie Mae expects lenders to make good faith efforts to comply with TRID; failure to use a TRID-required form will be deemed a violation of the good faith efforts standard and will render the mortgage loan subject to all contractual remedies, including repurchase.
Fannie Mae reminds lenders that under the generally applicable provisions of the Selling Guide, A3-2-01, Compliance with Laws, Fannie Mae retains the right to require a repurchase for a lender’s violation of applicable law if the lender’s failure to comply could be expected to impair Fannie Mae’s ability to enforce the note or mortgage, or to impose assignee liability on Fannie Mae. However, Fannie Mae does not intend to exercise contractual remedies, including repurchase, for noncompliance with the newly applicable provisions of TRID except in two limited circumstances: if the required form is not used; or if a particular practice would impair enforcement of the note or mortgage or would result in assignee liability, and a court of law, regulator or other authoritative body has determined that such practice violates TRID.
We understand the significant effort the industry has put into TRID implementation and hope this Lender Letter provides you with reassurance that we will work with you during this transition period. Lenders who have questions about this should contact their Account Team. Please check Fannie Mae’s website later this week for some frequently asked questions that will answer additional questions about TRID.
Carlos T. Perez
Senior Vice President and
Chief Credit Officer for Single-Family
The Freddie Mac Industry Letter is reproduced below:
Information Related to Know Before You Owe TILA-RESPA Integrated Mortgage Disclosure Rule
Freddie Mac recognizes that many Seller/Servicers and their partners in the mortgage industry have undertaken considerable technological and operational changes in order to meet the requirements created by the Consumer Financial Protection Bureau’s Know Before You Owe Truth-in-Lending Act (TILA)-Real Estate Settlement Procedures Act (RESPA) Integrated Mortgage Disclosure Rule (i.e., “TRID Rule”), which went into effect October 3, 2015. Freddie Mac recognizes and appreciates the enormous efforts that our Seller/Servicers have made to date.
Freddie Mac is aware that some Seller/Servicers continue to address the implementation of the TRID Rule’s technical requirements. In recognition of this, until further notice, Freddie Mac will not conduct routine post-purchase loan file reviews for technical compliance with the TRID Rule; however, consistent with current practices, Freddie Mac will evaluate whether the correct forms were used in connection with the origination of a Mortgage. After a transitional period, Freddie Mac will consider whether to begin such reviews for technical compliance; any such measures will be announced before being implemented.
Freddie Mac expects Seller/Servicers to make good faith efforts to comply with the TRID Rule; failure to use a TRID Rule-required form will be deemed a violation of the good faith efforts standard and will render the Mortgage subject to all contractual remedies, including repurchase.
Freddie Mac reminds Seller/Servicers that under the generally applicable provisions of Single-Family Seller/Servicer Guide Section 6.2(f), Freddie Mac retains the right to require a repurchase for a lender’s violation of applicable law if the lender’s failure to comply could be expected to impair Freddie Mac’s ability to enforce the Note or Mortgage, or to impose assignee liability on Freddie Mac. However, Freddie Mac does not intend to exercise contractual remedies, including repurchase, for noncompliance with the newly-applicable provisions of the TRID Rule except in two limited circumstances: if the required form is not used; or if a particular practice would impair enforcement of the Note or the Mortgage or would result in assignee liability, and a court of law, regulator or other authoritative body has determined that such practice violates the TRID Rule.
CONCLUSION
If you have any questions about this Industry Letter, please contact your Freddie Mac representative or call Customer Support at (800) FREDDIE.
Sincerely,
Christina K. Boyle
Senior Vice President
Single-Family Sales and Relationship Management
Anna DeSimone founded Bankers Advisory in 1986 and is a nationally recognized authority in residential mortgage lending. She has received numerous industry awards and has authored more than 40 best practices guides and hundreds of articles.
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