Lenders Better Have a Good Reason for TRID Estimate Change

What exactly is an “extraordinary” or “other unexpected event” under the TILA-RESPA integrated disclosure rules? The new definition of “changed circumstance” includes one prong defining the situation as “an extraordinary event beyond the control of any interested party or other unexpected event specific to the consumer or transaction.” General rules noting specific triggers of a changed circumstance will be almost impossible to define in advance — and will likely need to be defined on a case-by-case basis. General determinations will be few and far between. The regulations provide very little guidance, but a few broad concepts can be applied. Determination of changed circumstance will be based on the facts available and will apply to a particular scenario. Generally, events or decisions that are not beyond the lender’s control, and/or that are fairly easy to discover, will not qualify as changed circumstances. Natural disasters, unforeseeable title defects and unknown, hidden property conditions or defects, can support a change in circumstances. Lenders should remember in evaluating a “changed circumstance” under TRID that they should look to the cause of the change, rather than the change itself, in determining whether a changed circumstance occurred. If on a large loan, in a declining neighborhood, a lender required a second appraisal — that would certainly not be a change in circumstance. However, if the second appraisal was required because of storm damage in the area where the property was located during processing, that likely would qualify as a changed circumstance. The terms “unexpected” and “extraordinary” will not be given broad meaning. Rather, unexpected as used in the rule likely refers to a situation that was unforeseeable based upon the circumstances at the time the Loan Estimate was provided. Events such as mistakes by vendors or loan officers may not be “expected” but occur, unfortunately, with some level of regularity and would not be considered a change in circumstance.

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