On May 1, 2019, the Consumer Financial Protection Bureau (CFPB) released a factsheet discussing how the TILA-RESPA Integrated Disclosure Rule (TRID) applies to assumptions of residential mortgage loans, and specifically whether Loan Estimates and Closing Disclosures are required for assumption transactions.
The CFPB factsheet provides both a flowchart and a discussion of when TRID disclosures are required. The Loan Estimate and Closing Disclosure are not required unless the assumption is a closed-end consumer transaction that is secured by real property or a cooperative unit and is not a reverse mortgage subject to 12 CFR § 1026.33. Also, the transaction cannot be exempt from TRID, such as a housing assistance loan (12 CFR 1026.3(h)).
Additionally, the transaction must be an “assumption” as defined in 12 CFR § 1026.20(b). The creditor must provide express acceptance of a new consumer as a primary obligor to an existing residential mortgage transaction. Also, the creditor must be creating or retaining a security interest in the new consumer’s principal dwelling and must finance the new consumer’s acquisition or initial construction of the dwelling.
For transactions that do not require a Loan Estimate and Closing Disclosure, other disclosures may be required under TILA and RESPA.
To view the CFPB Factsheet for additional information, click here.
