CFPB eyes TRID changes that could reshape closing disclosures

The Consumer Financial Protection Bureau put out a Request for Information for possible revisions to the TILA/RESPA Integrated Disclosures, with the comment period ending Aug. 10.

This request is in line with Pres. Trump's March 13 executive order, "Promoting Access to Mortgage Credit," the Federal Register posting said.

The RFI has 22 questions, divided into several topic areas:

·     Timing Requirements—TRID Rule and Right of Rescission, nine questions;
·     Other TRID Requirements, seven questions;
·     Tailored Requirements for Small Banks and Credit Unions; two questions;
·     Reverse Mortgages, four questions.

The final question in the reverse mortgage section asks "Would consumers benefit from a tailored disclosure informing consumers about how reverse mortgages work and about terms and risks that are important to consumers when selecting a reverse mortgage, instead of the generic brochures and booklets?"

TRID has been a part of the marketplace for over 10 years, going into effect in October 2015. This followed a delay in the effective date amid much handwringing from some segments of the industry, including credit unions.

Richard Horn is a former Consumer Financial Protection Bureau senior counsel and special advisor who led the formation of the final TRID rule. In a blog post discussing the RFI, he pointed out the Loan Estimate and Closing Disclosure forms were put through a consumer testing process both before and after the rule was proposed. Horn believes if changes are made, they should be similarly tested.

"I hope the process leads to the CFPB weighing not only the industry comments and criticisms, but also how the actual marketplace is functioning, how most lenders are currently complying just fine, and how consumers are benefiting," Horn, currently a managing partner in the Garris Horn law firm, said in a comment sent to National Mortgage News.

"I think there may be vocal critics in response to the RFI, but there may also be consumer groups responding in favor of the tolerances and timing requirements, and the CFPB should weigh all sides."

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The Mortgage Bankers Association will be working with its members for a response to the RFI.

The organization "appreciates the CFPB's willingness to consider how to improve mortgage regulations by thoughtfully balancing consumer protections with the need to reduce borrower costs and create greater access to credit," a statement from Justin Wiseman, vice president of regulatory affairs and managing regulatory counsel, said.

The Community Home Lenders of America said it is pleased the CFPB is looking to improve access to safe mortgage credit. 

"We will be recommending ways to give families updated and sometimes faster ways to access their mortgage money, while maintaining sufficient guardrails to protect these same families," said Rob Zimmer, the CHLA's head of external affairs, in a statement.

The group plans to renew its past call on regulators to follow the Dodd-Frank statute and not make one-size-fit-all regulations that treats its members like the so-called too big to fail lenders.

The organization has previously pointed to Section 1024(b)(2) of Dodd-Frank, which it said calls on the CFPB to tailor the extent of its supervision of non-banks by asset size, volume, consumer risk and extent of state supervision.

"Doing so forces consolidation and removes robust mortgage choice for American homebuyers," said Zimmer.

The Independent Community Bankers of America called on the CFPB to tailor its requirements "where appropriate" for the small and mid-sized banks, Tim Roy, vice president, housing finance, said in a statement. In this way, those community banks are able to more efficiently meet local housing and construction financing needs while at the same time strong consumer protections are maintained. 

"We appreciate that the CFPB specifically sought input on whether certain construction-loan disclosure requirements should be modified or waived, noting the ICBA Trial Disclosure Program Waiver that permitted alternative Loan Estimate and Closing Disclosure forms designed for construction lending," Roy said. "The CFPB's recognition that standard TRID disclosures do not always align with the unique characteristics of construction loans is an important step toward reducing unnecessary compliance burdens and improving consumer understanding."

When the President's executive order came out, the ICBA sent a letter to CFPB Acting Director Russell Vought urging him to act expeditiously.

The section in the letter on TRID called for such things as a clear materiality standard, streamlined re-disclosure requirements and creating what it termed "a reasonable tolerance" for fees disclosed on the Loan Estimate to account for routine changes during the loan process.

America's Credit Unions supports the overall effort to reduce the regulatory burden connected with Dodd-Frank, stating many have not proven to either benefit or better protect consumers, but instead increased costs for lenders.

"Related to TRID, we've recommended the bureau reduce operational complexity and regulatory uncertainty," James Akin, its head of regulatory advocacy, said in a statement. "As the original consumer protectors, credit unions support clear and meaningful disclosures. There is a right balance to strike here."