ALTA Responds to CFPB’s Plans to Clarify TRID
May 3, 2016
Responding to concerns raised by ALTA and other trade associations about the TILA-RESPA Integrated Disclosures (TRID or Know Before You Owe), the Consumer Financial Protection Bureau announced plans to provide further guidance and open a new rulemaking period.
“We recognize that the implementation of the Know Before You Owe rule poses many operational challenges,” CFPB Director Richard Cordray wrote in a letter to joint trade associations. “We also recognize that implementation is particularly challenging because of the diversity of the participants, 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.”
Because of this, the CFPB has started drafting a Notice of Proposed Rulemaking (NPRM) on the Know Before You Owe rule. Cordray wrote that the bureau hopes to issue the NPRM in late July and looks forward to receiving industry comments.
In the letter, Cordray said the CFPB agrees that adjustments to portions of the regulation text and commentary would provide “greater certainty and clarity. Cordray wrote in the two-page letter that regulators "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."
ALTA took the opportunity to remind the bureau that the disclosure of title insurance premiums remains one area that needs corrected.
“ALTA’s primary goal for proposed adjustments to TRID (Know Before You Owe) this July is ensuring consumers receive clear information about their title insurance costs on the closing disclosure,” said Michelle Korsmo, ALTA’s chief executive officer. “The current disclosure calculation is inconsistent with the Bureau’s mission to inform consumers about the true costs of their real estate transaction.”
“ALTA appreciates Director Cordray and the CFPB stepping up to the plate and committing to provide more clarity on TRID,” Korsmo continued. “We value their openness in this process moving forward. We have worked closely with the Bureau for over five years on TRID. We are committed to continuing our conversation with Director Cordray and the CFPB staff to correct the calculation of title insurance policy premiums on the mortgage disclosures this summer.”
Cordray wrote that the CFPB will continue to work with industry, consumers and other stakeholders to support smooth transition for the mortgage market. To help with this, Cordray said the bureau plans to incorporate some of the existing informal guidance—provided through webinars and compliance guides—into the regulation text and commentary.
The bureau hopes to continue to receive concrete examples about technical problems with the rule. While anecdotes help frame the issues, the CFPB is looking for detailed information to help them understand and evaluate how to best provide guidance. A key TRID issue for mortgage originators and secondary market investors is the legal liability due to errors on the disclosures. Secondary market investors have rejected buying mortgages because of fears of being sued down the road due to the errors.
“The complexity of TRID makes it difficult for mortgage originators and secondary market investors to determine if they have complied with this massive regulation. ALTA will use this opportunity to work with the CFPB to ease this uncertainty for our members.”
U.S. Senator Bob Corker (R-Tenn.), a member of the Senate Banking Committee, also applauded the CFPB's decision to reopen TRID for public comment.
In March, Corker sent a letter to Cordray requesting increased clarity regarding the TRID rule. Corker also questioned Cordray about the regulation during a Senate Banking Committee hearing earlier this month, asking if the CFPB would consider steps to alleviate confusion.
“These new mortgage disclosure requirements have created some challenges for consumers and institutions,” said Corker. “I commend Director Cordray for taking this important step to provide more clarity. The TRID rule is impacting millions of Americans, and we must ensure it is implemented in the most transparent and effective manner possible.”
U.S. Rep. French Hill (R-AR) said he was thankful that the CFPB acknowledged problems with TRID implementation, but added "it should not have taken seven months to do so."
Hill, along with Brad Sherman (D-Calif.), sponsored the Homebuyers Assistance Act (H.R. 3191). This bill would have created an official hold-harmless period for companies making good-faith efforts to comply with TRID. The U.S. House of Representatives in October passed the bill by an overwhelming bipartisan vote of 303-121.
"Implementation issues were not unforeseen, which is why the House overwhelmingly passed my bill, the Homebuyers Assistance Act, last October," he added. "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 home ownership.”
Contact ALTA at 202-296-3671 or communications@alta.org.