Industry response to the Consumer Financial Protection Bureau’s proposed amendments to the Know Before You Owe mortgage disclosure rule, also known as TRID, have been generally positive. However, some groups think more changes are needed.
The National Association of Federal Credit Unions would like the CFPB to offer more guidance on lender paid closing costs and making credit accessible to those with less cash, while the Mortgage Bankers Association seeks better exemption rules for housing finance agency loans. Both organizations sent multi-page documents in October to the bureau thanking the entity for its new rules, but also requesting additional changes.
The Know Before You Owe rules and forms became effective Oct. 3, 2015. In response to industry and consumer request for corrections and clarifications, the CFPB released proposed amendments to the TRID rule in August 2016. Commentary was open until Oct. 18, and the amendments are expected to be finalized in spring 2017.
“TRID compliance remains a top concern for our members and remains one of the most common reasons credit unions seek compliance assistance from NAFCU,” Carrie Hunt, executive vice president of government affairs and general counsel for NAFCU, wrote in an Oct. 18 letter to the CFPB regarding the proposed changes.
“While NAFCU welcomes many of the bureau’s amendments as a step in the right direction, we continue to believe the CFPB needs to do more to streamline compliance, fill-in gaps and mitigate the total regulatory burden of this highly complex rule,” she wrote.
Key changes proposed by the CFPB, according to a July 29 news release by the bureau include:
- Adding tolerance provisions on loan payments;
- Providing for more housing assistance loans by offering partial exemption regarding disclosure requirements;
- Simplifying compliance by including all cooperatives in the rule; and
- Clarifying how creditors may provide separate disclosure forms to the consumer and seller.
According to an online statement by the Mortgage Bankers Association, the original TRID rule created “a sea change for lenders, settlement service providers, real estate agents and consumers. It also has necessitated considerable expenses for systems and business process changes, training and other needs – costs ultimately borne by consumers.”
While thanking the CFPB for working on the amendments in a 20-page response on Oct. 18, the MBA also listed 14 points of concern. One relates to the need for lenders, real estate brokers and agents to receive specific information from the borrower and the seller. Another requests the bureau consider broadening the exemption for housing finance agency loans.
Meanwhile, the American Bankers Association and Consumers Bankers Association submitted a joint comment letter on Oct. 18 to the CFPB in response to the proposed amendments. In the letter, the groups said lack of clarity about liability for unintentional mistakes and technical noncompliance with TRID remains a “major concern” of lenders and investors.
“The associations are very appreciative of the numerous amendments offered in this proposal, and our preliminary analysis reflects that this proposed rule will resolve multiple ambiguities that banks deem significant,” the groups wrote in the letter. “We would urge that the bureau explicitly allow that any tolerance or cure provisions enacted in this rulemaking be made available for loans that predate this proposal. This step would allow for the correction of previous noncompliance caused by the interpretative ambiguity that the bureau is now fixing.”