TRID, Take Two?

Chris DeSantis

By Chris DeSantis

If you have ironed out your bugs and confusion in the seven months since the Consumer Financial Protection Bureau (CFPB)’s TILA-RESPA Integrated Disclosure (TRID) rule took effect, don’t get too comfortable. More changes to the biggest mortgage transaction overhaul we’ve had in four decades are on the way.

In a letter issued to several banking and financial services industry trade groups yesterday, the CFPB said it has “begun drafting a notice of proposed rulemaking on TRID,” or the “Know Before You Owe” rule, as the bureau prefers to call it.

The proposed rule, which the bureau expects to be released in late July, will address “places in the regulation text and commentary where adjustments would be useful for greater certainty and clarity.”

Why change TRID now?

“We recognize that the implementation of the Know Before You Owe rule poses many operational challenges. We also recognize that implementation is particularly challenging because of the diversity of participants, from small to large financial institutions, mortgage brokers, real estate brokers and title companies, through warehouse lenders, investors, due diligence firms and ratings agencies, whose perspectives may vary as to what compliance under the rule requires,” the CFPB’s letter stated.

Perhaps acknowledging widespread criticism that the CFPB is slow to respond to industry concerns and prefers to “regulate by enforcement” instead of issuing formal compliance bulletins or guidance, the bureau also noted that its cross-industry team meets weekly to “discuss industry feedback and identify appropriate responses and, as you know, has near-daily interactions with external stakeholders to identify issues and questions.”

“We do recognize that incorporating some of the bureau’s existing informal guidance, whether provided through webinar, compliance guide or otherwise, into the regulation text and commentary would be helpful,” the CFPB conceded.

What happens next?

The bureau’s Office of Financial Institutions and Regulations and Markets teams will hold a handful of meetings in late May or early June to collect industry feedback and suggestions before issuing the notice of proposed rulemaking.

Until then, the CFPB encouraged industry stakeholders to continue to submit questions, comments and feedback and to use the resources it has made available on its website for guidance on how to handle certain issues.

What will change?

The CFPB is unlikely to make substantial revisions to the TRID rule, but pretty much every segment of the mortgage, real estate and settlement service industries has an idea of the kinds of changes they would like to see.

Initially, the real estate segment’s biggest concern was how the TRID disclosure process might delay or lengthen mortgage transactions – that timeline seems to have fallen into about an eight-day groove.

Now, the biggest concern for real estate agents and brokers seems to be getting the same access to the Closing Disclosure (CD) form that they had with the old HUD-1 form.

The CD contains important information that agents need for a variety of reasons, but many lenders are not giving them access to the form due to concerns about protection of consumers’ nonpublic private information.

This, agents argue, may be contributing to the high number of errors on TRID loans causing investors to reject them and lenders being forced to hold them in their portfolios longer than they typically do.

“NAR remains committed to ensuring Realtors have access to the CD, so they can put their expert advice to work guiding clients throughout the homebuying process uninterrupted from beginning to end,” said Tom Salomone, president of the National Association of REALTORS.

Ken Trepeta, president and executive director of the Real Estate Services Providers Council Inc. (RESPRO), a trade group devoted to fostering legally compliant partnerships, joint ventures and subsidiaries in the real estate industry, called the CFPB’s proposed rulemaking “a golden opportunity to provide concrete binding guidance and fix the problems that have hampered TRID/Know Before You Owe implementation.”

“We hope the CFPB will be expansive in this effort and take the opportunity to clarify liability issues along the lines of applying TILA liability only to TILA type issues, address confusion in the cure provisions, the disclosure of insurance and the ability of consumers to authorize lenders to share disclosures with other settlement service providers,” Trepeta said.

Here’s how the rulemaking process will go:

1. The CFPB will conduct a few meetings with industry stakeholders in May and June to collect feedback.
2. The CFPB will publish in the Federal Register a notice of proposed rulemaking sometime in July. The proposed rulemaking will outline what the bureau plans to change and seek public comment. Depending on the complexity of the rule, comment periods may last for 30 to 180 days. These comments will become part of the public record.
3. The CFPB will publish a full response to the public comments and provide an updated analysis and justification for the new rule. If the new draft differs greatly from the first version, the process begins again. If the rule is substantively similar to the first version, the CFPB will publish it in the Federal Register. If no further steps are taken by the public or interested stakeholders, the new rule is codified into the Code of Federal regulations and the CFPB sets an effective date.
4. The rule becomes effective for some time after initial publication giving the regulated parties some time to come into compliance.

Chris DeSantis is a regional sales executive at Surety Title Company, LLC, covering all of New Jersey and Southeastern Pennsylvania. He began his career with Surety in 2006. Chris did everything from deliveries, marketing, and compliance, but spent five of those years with a significant emphasis in information technology and telephony. With his bachelor’s degree in finance from Rutgers University, Chris is able to take a different approach when it comes to meeting a client’s title insurance needs. Chris is also an active volunteer firefighter in Evesham Township, New Jersey. For more information please reach out to Chris at