Industry communications with the Consumer Financial Protection Bureau (CFPB) appear to have paid off.
Nearly seven months after the implementation of the CFPB’s TILA-RESPA Integrated Disclosure (TRID) rule, the bureau announced that it would reopen rulemaking, with a notice of proposed rulemaking expected to be released by late July.
The new rulemaking, governing what also is known as the Know Before You Owe mortgage disclosures, would incorporate some of the bureau’s existing informal guidance as well as provide adjustments in the regulatory text and commentary, CFPB Director Richard Cordray said in a letter to the industry.
“We do recognize that incorporating some of the bureau’s existing informal guidance, whether provided through webinar, compliance guide, or otherwise, into the regulation text and commentary would be helpful,” he wrote. “We also believe that there are places in the regulation text and commentary where adjustments would be useful for greater certainty and clarity.
“Accordingly, we have begun drafting a Notice of Proposed Rulemaking (NPRM) on the Know Before You Owe rule. We hope to issue the NPRM in late July and look forward to your comments on it then.”
The CFPB Office of Financial Institutions, along with the CFPB’s regulations and markets teams, will arrange one or two meetings in late May or early June, before the NPRM is issued, to further discuss TRID.
“We will continue to work with industry, consumers and other stakeholders to support a smooth transition for the mortgage market. As we do so, we and other regulators are all agreed that our oversight of the implementation of the Know Before You Owe mortgage disclosure rule in the months ahead will continue to be sensitive to the progress made by those entities that have squarely focused on making good-faith efforts to come into compliance with the rule,” Cordray wrote.
Rep. Randy Hultgren (R-Ill.), a member of the House Financial Services Committee that oversees the CFPB and has watched TRID implementation from the start, told The Title Report the CFPB's move was necessary.
“I have long expressed the concerns of my constituents and the mortgage industry about the confusion that would be caused if this rule was not implemented properly," Hultgren said in a statement. "I wish the CFPB had listened. After only a few months of being in place, the new integrated mortgage disclosures are already creating unnecessary costs for my constituents and making it harder for them to purchase a home.”
Rep. French Hill (R-Ark.), who was the lead author of H.R. 3192, the hold-harmless bill that passed the House last fall, told The Title Report he was glad to see the CFPB came around to recognizing the difficulties in implementation.
"I am glad Director Cordray acknowledges the problems with implementing TRID, but it should not have taken seven months to do so," Hill said in a statement. "Implementation issues were not unforeseen, which is why the House overwhemingly passed my bill, the Homebuyers Assistance Act, last October. I remain committed to ensuring CFPB works with the real estate industry to provide much-needed guidance it can rely on to best serve those hoping to achieve the American dream of homeownership."
Sen. Bob Corker (R-Tenn.), who wrote Cordray about issues with TRID implementation earlier this year, gave kudos to the director for working to clarify the rule.
"These new mortgage disclosure requirements have created some challenges for consumers and institutions. I commend Director Cordray for taking this important step to provide more clarity," Corker said in a statement. "The TRID rule is impacting millions of Americans, and we must ensure it is implemented in the most transparent and effective manner possible."
Cordray thanked the industry and the Mortgage Bankers Association for leading the way in gathering industry concerns on TRID compliance.
“We want to continue the collaboration and engagement toward solutions and provide guidance where we have the ability to do so,” he wrote.
The letter said the CFPB recognized the challenges in TRID compliance. “We also recognize that implementation is particularly challenging because of the diversity of participates, from small to large financial institutions, mortgage brokers, real estate brokers and title companies, through warehouse lenders, investors, due diligence firms, and rating agencies, whose perspectives may vary as to what compliance under the rule requires.”
Cordray said the bureau acknowledged that many industry participants have requested answers in writing. “We are continually reassessing how best to provide further guidance,” he said.
The letter was addressed to “Industry Trades and their Members,” with the industry trades being identified within a footnote as: American Bankers Association (ABA), Consumer Bankers Association, Credit Union National Association, Financial Services Roundtable-Housing Policy Council, Independent Community Bankers of America, Mortgage Bankers Association, National Association of Federal Credit Unions and Structured Finance Industry Group.
Stay tuned to October Research, LLC publications for more industry reaction and in-depth analysis.
Subscribers to The Title Report can access more about TRID at our educational resource page, The TRID Journey, www.thetitlereport.com/TTR/TRID-Journey-TTR.aspx
Subscribers to sister publications The Legal Description, RESPA News and Dodd Frank Update will see follow up stories on this subject next week, along with plenty more insight and reaction over the next three months leading up to the NPRM publication.