The Consumer Financial Protection Bureau (CFPB) recently published its Spring 2016 rulemaking agenda. One of the current initiatives on the agenda is the forthcoming release a Notice of Proposed Rulemaking (NPRM) to provide additional guidance and clarification pertaining to the Truth in Lending Act (TILA), Real Estate Settlement and Procedures Act (RESPA) Integrated Disclosures (TRID) rule, also referred to as the Know Before You Owe (KBYO) mortgage rule. The NPRM is slated for release mid-July and will likely lead to an amendment to the TRID rule. Industry stakeholders look forward to the long awaited rule clarification and guidance that was absent at time of implementation.
The CFPB made mention of this intention back in April when Director Richard Cordray issued a communication to industry trade associations. This is a big win for the mortgage industry and representatives applauded the agency’s efforts to address TRID concerns. Mortgage Bankers Association (MBA) Senior Vice President, Pete Mills remarked, “the approach laid out should provide a swift path to issuing a final rule that will give lenders, the secondary market and consumers the clarity and consistency of disclosures the market needs. In the meantime we appreciate that the Bureau's ‘diagnostic period’ for the Know Before You Owe rule will continue to accommodate good faith compliance efforts.” The American Bankers Association (ABA) President and Chief Executive Officer (CEO), Rob Nichols, added, “Many of the elements the industry identified for clarification or amendment were developed in ABA's compliance working group meetings, and we look forward to the opportunity to continue sharing banker feedback with the CFPB.”
Although specifics are not yet detailed, the CFPB’s letter to the trade associations expresses appreciation of the concerns presented to date, requesting continued provision of “detailed and precise information” that can assist staff in fully understanding the issues and questions that are of importance to the industry. The communication directs industry stakeholders to their Regulatory Implementation webpage, which provides links to all of the TRID forms, videos and educational materials. Another important resource exists in the TRID webinar series that has been hosted by the Federal Reserve System through their Consumer Compliance Outlook portal. The CFPB also discusses their recognition of the importance of migrating informal guidance into the regulation and commentary. According to the communication with the trade associations, the NPRM will be drafted based on two meetings set to be held late May and early June.
It will be important for the industry as a whole to quickly take note of the NPRM once it is issued and respond with feedback to trade associations or the CFPB. As we are all aware there are a number of gaps that exist in understanding the full complexity of TRID/KBYO implementation. It will be no small feat to try to shore up the rule and successfully address industry concerns over the next few months. Director Cordray references the CFPB’s understanding of the challenges associated with implementing the KBYO rule in his April communication and adds that they “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.” This extension of flexibility will not be a long-term option for lenders, servicers and vendors. They will need to quickly implement and adhere to rule requirements as they exist and are amended.
eLynx is an avid industry collaborator. Having recently participated in the CFPB’s eClosing pilot and being the first to achieve Premier Level Certification from MISMO, eLynx is on the forefront of leading the industry in compliance coupled with strategic direction. Equally as important, eLynx understands the day-to-day operational challenges that lenders and servicers face, especially in light of continued regulatory change. Our solutions can help you effortlessly manage your documents and data from origination through delivery, creating efficiency, compliance and security. The mortgage industry is positioned to capitalize on the changing direction of TRID policy. Whether you are a lender, servicer or vendor, seize the chance to map out a strategic emphasis that lines up with industry regulators, avoiding future audit issues, fines and even enforcement action, as well as putting your organization out in front of the competition.