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CFPB agrees to a TRID rewrite to provide clarity

The Consumer Financial Protection Bureau (CFPB) has agreed to rewrite a portion of the TRID consumer-disclosure rule to provide greater clarity for the mortgage industry.

In a letter to industry trade groups on Thursday, CFPB Director Richard Cordray said the bureau would undertake a formal rulemaking process this summer that would incorporate written guidance into the rule’s text.

The industry has been pressing for greater clarity since TRID went live on Oct. 3, and has sought written, legally-binding guidance from the CFPB. 

“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,” Cordray wrote. “We also believe that there are places in the regulation text and commentary where adjustments would be useful for greater certainty and clarity."  

Cordray indicated that bureau would issue a draft of the proposed modifications to the rule in July and hold meetings with industry participants next month or in June.

The move was praised by industry trade groups, like the American Bankers Association, Mortgage Bankers Association (MBA) and the Community Mortgage Lenders of America.

“MBA is very pleased with CFPB’s letter and believes the approach laid out should provide a swift path to issuing a final rule that will give lenders, the secondary market and consumers the clarity and consistency of disclosures the market needs,” said Pete Mills, a senior vice president with the Mortgage Bankers Association.

TRID, an acronym for the TILA-RESPA Integrated Disclosure Rule, created streamlined disclosure documents that are presented to borrowers prior to a loan closing, and it also established a formal schedule of disclosures. TRID also is known as the Know Before You Owe rule.   

The forms are intended to make it easier for borrowers to understand the fees and also prevent last-minute changes to the loan terms.

Lenders and other industry participants, however, have faced enormous technical hurdles in implementing the changes. A large number of TRID errors have been flagged in loans under review in the secondary market since the rule went live this past fall.  


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