In April, the Consumer Financial Protection Bureau (CFPB) promised amendments to TRID – the Truth in Lending Act (TILA), Real Estate Settlement Procedures Act (RESPA) Integrated Disclosures. After the official roll out of the disclosures in October, the CFPB convened a series of webinars to provide guidance on implementation questions. Then this spring, CFPB Director Richard Cordray announced plans to codify guidance and amend certain provisions in July with a new proposed rule.
In a letter to housing industry trade associations, Director Cordray said, “We recognize that the implementation of the Know Before You Owe (KBYO) rule poses many operational challenges.” He added that the CFPB acknowledged the need to incorporate informal compliance guidance into the regulatory text as well as areas “where adjustments would be useful for greater certainty and clarity.” The next phase of the communication came on the last business day in July when the CFPB published the proposed amendments.
The proposed rule with request for public comment was released on July 29, 2016. In a statement, Director Cordray said, “Our proposed updates will clarify parts of our mortgage disclosure rule to make for a smoother implementation process.” Industry stakeholders have until October 18, 2016, to submit feedback on the proposed amendments, after which, the CFPB said such comments “will be weighed carefully before final regulations are issued.”
So here’s what you need to know …
1. We're going back to the original finance charge tolerances.
TRID changed the calculation of the total of payments to exclude the use of the finance charge. The CFPB has proposed now including tolerances for the total of payments calculations that “parallel existing tolerances” for the finance charge, essentially making the treatment of the total of payments “consistent with” its prior calculation.
2. The proposal would expand the partial exemption for housing finance agencies.
The CFPB has proposed clarifying certain provisions of TRID to maintain a more inclusive partial exemption for housing finance agencies. Recording fees and transfer taxes can be charged by agencies claiming the exemption; furthermore, those charges would be excluded from the exemption’s limits on costs.
3. Co-ops are now included.
The original TRID language only applied to “transactions secured by real property,” excluding cooperatives. The CFPB has proposed extending regulatory coverage to cooperative units in order to “simplify compliance.”
4. Lenders will have clearer rules for sharing disclosures.
The proposed amendments include additional commentary to “clarify how a creditor may provide separate disclosure forms to the consumer and the seller,” as the CFPB has realized that it is “usual, accepted and appropriate” for lenders to share the Closing Disclosure among multiple parties to the transaction.
Although the proposed rule doesn’t address every outstanding issue, such as cures for technical errors and the simultaneous issuance of title insurance premiums, it does clarify some of the most frequently discussed areas of uncertainty. The industry’s response to the proposed rules is likely to have some bearing on the ultimate shape of the amendments