While saying the Consumer Financial Protection Bureau should prioritize narrow targeted reforms to the TILA/RESPA Integrated Disclosures, the Mortgage Bankers Association is also seeking the elimination of the three-day right of rescission on a refinance.
The response was just one of 339 made for the
The RFI had 22 questions, divided into the following 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.
When the RFI was published, the CFPB noted it was a part of Pres. Trump's March 13 executive order, "
A coalition of consumer groups claimed TRID changes would open the door for "disreputable lenders" to go after borrowers and give them risky loans in their letter.
"Instead of weakening regulations, we urge the CFPB to enforce the existing TRID regulations," said Steve Sharpe, senior attorney at the National Consumer Law Center, in a press release. "Any changes must serve the ultimate goal of helping borrowers access safe and affordable credit."
Besides the NCLC, the other signatories included the National Law Housing Project, the National Fair Housing Alliance, the Americans for Financial Reform Education Fund and the Consumer Federation of America.
Responses came not just from trade and consumer groups, but also companies like Zillow, as well as individuals. Some argued that the appraisal fee disclosure needed to be changed. Instead of a single amount, the figure should be separately delineated among the parties receiving it, the appraiser and the appraisal management company.
What the MBA is seeking
"Although MBA has previously identified opportunities to improve the Rule, we encourage the Bureau to prioritize narrow targeted reforms that meaningfully
"More comprehensive revisions should be undertaken only where the long-term benefits clearly outweigh the implementation costs and operational disruption associated with such changes."
Besides the removal of the right of rescission, the MBA calls for:
- Adjusting tolerance thresholds for costs that are not within the creditor's ability to control;
- Allow for a consumer to waive or modify waiting periods regardless of whether they are experiencing a bona fide personal emergency;
- Change the definition of "application" so lenders can ask for additional information before providing the Loan Estimate disclosure form; and,
- Eliminating the total annual loan cost table from reverse mortgage disclosures.
Under current rules, refi borrowers have a three-day pre-consummation waiting period for the Closing Disclosure and then the three-day rescission window after closing.
"Consumers already receive significant disclosures and review time prior to closing, making the overlapping waiting periods somewhat redundant," the MBA said. "The CFPB should eliminate the post-consummation rescission period for refinance transactions whenever the three-business-day Closing Disclosure waiting period has been satisfied or waived."
But the consumers' group letter said the right of rescission is required by statute and is a vital protection for consumers. The pre-closing disclosure is not a substitute for the right of rescission, they added.
Changing the qualified mortgage rule
The Community Home Lenders of America in its letter called for a change to the qualified mortgage rule in order to facilitate first-time home buyer activity. The current rule is "an unintended impediment to the effective use of governmental and nonprofit down-payment assistance," because of the QM points and fees test, CHLA said.
Once again, the group
The CHLA seeks changes to loan officer compensation rules so they only apply to competition between firms. Current rules reduce the number of small dollar mortgages, discourage the use of state bond loans and make it hard to match offers in competition, its letter said.
Meanwhile, the Broker Action Coalition said it "strongly supports" the Know Before You Owe framework because it brings consumer clarity.
But similarly to the MBA, it supports eliminating the three-day right of rescission.
The BAC wants the timing of electronic disclosures to start when they are delivered, rather than when the borrower acknowledges they have gotten them.
Among the key points in the letter from the National Association of Hispanic Real Estate Professionals, was its call for translated disclosure forms and consumer guides in Spanish and in plain language. It also wanted tailored compliance requirements for small banks and credit unions serving Hispanic communities.
Proceed cautiously for changes to reverse mortgages
If the CFPB were to make changes to
If changes were to be made to the Truth in Lending and Real Estate Settlement Procedure Act regulations for reverse mortgages, those should be done "through an additional notice of proposed rulemaking that identifies the specific regulatory text, model disclosure content and formatting, instructions, and compliance expectations under consideration," NRMLA wrote.
This is important because reverse mortgage disclosures are "deeply embedded" in technology platforms and even targeted changes could require coordinated updates among multiple parties.
NRMLA is looking for a reverse mortgage-specific Truth-in-Lending disclosure which incorporates the TALC table the MBA letter looks to eliminate.
The MBA argues the TALC "is not intuitive to the consumer and leads to consumer confusion. The cost expressed as a percentage can be confused with any associated interest rate information."
The consumer groups called for mandatory pre-loan counseling for all reverse mortgages; this is
"A carefully designed, well-tailored reverse mortgage disclosure would help consumers make more informed decisions; but a poorly designed one might make consumer confusion and risk even worse," the consumer groups' letter said.
