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Industry pushes for a greater TRID overhaul

Several mortgage and housing trade groups this week asked the Consumer Financial Protection Bureau (CFPB) to go further in the agency's proposed cleanup of the TRID consumer-disclosure rules, the massive regulation that kicked in one year ago.

Industry groups are asking that the bureau extend a soft enforcement period for several more months, and proposed changes that the CFPB has previously indicated it won’t do. For example, the industry wants the bureau to establish a way for companies to correct errors found in the documents after the loan has been originated. This would help shield a lender from legal liability should the loan ultimately default, and reassure issuers of mortgage-backed securities. TRID errors have shown up in recent loans that were to be pooled into securities. 

TRIDThe CFPB previously said it would be too complex to establish a method for curing loans beyond what is allowed already, and might undermine the rule. TRID does allow companies to correct certain formatting and non-numeric clerical errors in the documents.

TRID, or the TILA-RESPA Integrated Disclosure rule, went live on Oct. 3, 2015, creating new streamlined forms on the initial rate disclosure and final closing documents. It also established a timeline for the disclosures. The rule was intended to make it easier for consumers to understand their charges, but the changes created huge technical challenges for the industry. In April, CFPB announced it would make changes to TRID and sought industry input. 

Although the trade groups’ letters differ in some respects, the industry universally is pushing the CFPB to continue a softer enforcement policy. The CFPB has been examining companies for TRID compliance, but has pledged not to crack down on those showing a good faith in complying. The industry has urged the CFPB to announce that it is extending this policy until the bureau issues a final rule that includes the TRID cleanups.

“(TRID) continues to be an extremely complex regulation, one that is extremely tight in how it regulates the industry,” said Rod Alba, a senior vice president with the American Bankers Association. ABA submitted a joint letter with the Consumer Bankers Association on Tuesday.

“We are still extremely worried about liability — really uncontrolled liability — liability that we can’t measure,” Alba told Scotsman Guide News. “Many of our institutions still are struggling to achieve technical compliance with the rules.”

Industry groups also have asked the bureau to give lenders more flexibility around the time of the closing. TRID has largely forced companies to lock in mortgage rates and the consumer’s expenses three days before closing, the so-called “black hole” period. The CFPB has proposed to allow companies to make adjustments of the loan costs in the final closing document, but the industry has sought further refinements.

The industry is also asking for numerous technical changes that will clarify aspects of the rule. 

The Mortgage Bankers Association, the National Association of Realtors and other groups submitted separate letters ahead of the deadline to submit comments. The CFPB is expected to publish a final rule next year. 


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