Back to basics: Shopping for settlement service providers (Part 1)

Being stuck at home during the coronavirus pandemic, many people have turned to videogames for entertainment. One of the games that is popular in my household is Animal Crossing: New Horizons for the Nintendo Switch. If you’re not familiar with the game, here is the basic premise: The player’s character (a cartoon human) moves to a deserted island with a couple of anthropomorphic animals. Over time, the island is spruced up by plucking weeds, building homes, adding shops, and attracting new animal-residents.

What does this have to do with credit unions? The player is given a home loan when he or she first goes to the island, which needs to be paid off in a currency called “bells.” The home loan is provided by a racoon named Tom Nook, who allows the player to repay their home loan with zero interest and on a pay-as-you-wish plan. You’d be hard-pressed to find a financial institution in the real world that offers those terms for a mortgage. There are also no disclosures in Animal Crossing – Tom Nook provides no loan estimate or closing disclosure, or any other documentation.

Of course, in the real world credit unions and other financial institutions have to deal with the TILA-RESPA Integrated Disclosure (TRID). The NAFCU compliance team frequently gets questions regarding TRID, so let’s examine one aspect of it – the provisions relating to the loan estimate and whether or not a member is afforded the ability to “shop” for a settlement service.


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