Monday, October 5, 2015

CFPB informs mortgage industry of TRID compliance expectations; legislators urge industry to monitor penalties

By Stephanie K. Mann, J.D.

As the Oct. 3, 2015, effective date for the Know Before You Owe mortgage disclosure rule (or TRID rule) has arrived, the Consumer Financial Protection Bureau has sent a letter to mortgage industry trade groups setting forth the CFPB’s compliance expectations.

In a statement released on Oct. 2, 2015, the CFPB noted, “During initial examinations for compliance with the rule, the Bureau’s examiners will evaluate an institution’s compliance management system and overall efforts to come into compliance, recognizing the scope and scale of changes necessary for each supervised institution to achieve effective compliance.”

The bureau’s statement continued, “Examiners will expect supervised entities to make good faith efforts to comply with the rule’s requirements in a timely manner.”

Specifically, examiners will consider an institution’s:
  • implementation plan, including actions taken to update policies, procedures, and processes;
  • training of appropriate staff; and
  • handling of early technical problems or other implementation challenges.
The CFPB noted that this is similar to the approach it took in initial examinations for compliance with the mortgage rules that became effective at the beginning of January 2014.

Hold harmless. Meanwhile, Reps. Blaine Luetkemeyer (R-Mo) and Randy Neugebauer (R-Texas), chairmen of the two Financial Services subcommittees with jurisdiction over Truth In Lending Act and the Real Estate Settlement Procedures Act, have continued to urge CFPB Director Richard Cordray to implement a formalized hold harmless period. “TRID is one of the most fundamental changes to the real estate settlement process made in decades, and the American people deserve better than Director Cordray’s ‘my way or the highway’ approach,” said the press release.

The legislators also sent letters to 16 key financial services trade associations, urging them to monitor TRID-related penalties assessed to financial institutions and report all enforcement actions to Congress. While the Luetkemyer and Neugebauer expressed the hope that implementation of the rule would go smoothly, but expect “deep issues for consumers, lenders, and the CFPB. We stand ready to closely monitor TRID implementation and will work to ensure that CFPB’s unwillingness to institutionalize a grace period does not come as a detriment to homebuyers or sellers.”

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