Now that TRID is One Year Old . . .

Michael Cremata is Senior Counsel and Director of Compliance with ClosingCorp, a San Diego-based provider of residential real estate closing cost data and technology for the mortgage and real estate services industries. Cremata recently spoke with MReport about the CFPB’s TILA-RESPA Integrated Disclosure Rule (TRID), aka the “Know Before You Owe” mortgage rule, which passed its one-year anniversary on October 3.

What has worked well for TRID in its first year of existence?

As far as what has worked, I think the new forms introduced by TRID have been, by and large, very successful. Consumers are widely reporting that the new forms are easier to understand, and that they do a better job of explaining all the fees and costs associated with their loans. Consumers also report that the new forms better inform them of their right to shop for settlement services, and a high percentage of those consumers are in fact shopping. So this should ultimately lead to increased competition within the settlement service industry, and thus better service and lower prices for consumers.

Another positive development I’ve seen is that TRID’s stricter tolerance restrictions have forced lenders to take a closer look at their origination processes, and, in many cases, this has led to their implementing more sophisticated tools and processes, which, in addition to ensuring a higher degree of accuracy in their Loan Estimate fee disclosures, have also resulted in increased transparency and operational efficiencies. To some extent, I think the stricter tolerance restrictions have also forced settlement service providers to simplify their fee structures, which is a good thing from the perspective of consumers’ ability to understand these fees.

What hasn't worked well?

Looking back from where we were at this time last year, I think it’s clear that most of the doom-and-gloom predictions about TRID were, for the most part, unfounded. That’s not to say, though, that there haven’t been some significant challenges or negative consequences.

For one thing, loans are taking longer to close under TRID. I do think average closing times will eventually come back down, as lenders and providers continue to work out the kinks and get more comfortable with the new regulations, but I think the “minimum” closing time will probably never be what it was pre-TRID. That is, I don’t think we’ll ever see the return of the 15-day close.

I think it’s also fair to say that TRID’s treatment of simultaneous issue title rates has been a significant point of frustration for many in the industry. The position TRID and the CFPB have taken with regard to these fees, while not entirely without merit, is nonetheless inconsistent with a number of state regulations around the disclosure of title rates. So it has forced title providers in these states to create additional disclosure documents, with conflicting information, in order to comply with both the federal and state regulations. This has led to additional complexity and, unfortunately, added confusion among consumers.

What changes, if any, should be made to the TRID rule?

Other than the proposed revisions released by the CFPB in July, the biggest changes I’d like to see made to TRID are: one, the introduction of additional cure mechanisms, and, two, further clarity around assignee and secondary market liability. Unfortunately, though, the CFPB has not shown a willingness to address either of these issues any time soon. They specifically declined to introduce new cure mechanisms in their July Notice of Proposed Rulemaking, on the grounds that it could undermine incentives for compliance. And, as for providing further clarity on secondary market liability, I think the CFPB believes this is an area that should be left to the courts and Congress.