Depending on what you read and hear and who you believe, the implementation of the Consumer Financial Protection Bureau’s TILA-RESPA Integrated Disclosures rule in October was either no big deal or a really big deal.
Count the CFPB’s director, Richard Cordray, as one of those who thought the implementation of TRID was no big deal.
In fact, in a speech given Wednesday at the Consumer Federation of America Financial Services Conference, Cordray went so far as to compare the furor surrounding TRID with one of the biggest technological panics in recent memory, Y2K.
“When our ‘Know Before You Owe’ mortgage disclosure rule took effect two months ago, some again asserted that its implementation would paralyze the market. In fact, applications for home purchase mortgages were up 22% year-over-year in October,” Cordary said, according to his prepared remarks.
“Reports from participants across the market seem to be indicating that implementation of the new rule is going fairly smoothly,” Cordray continued. “So it seems that these anxieties were much like the errant predictions of technological disaster stemming from Y2K, which of course never materialized.”
This marks the second time that a prominent industry voice has compared TRID to Y2K.
In an interview with CNBC last month, David Stevens, president and CEO of the Mortgage Bankers Association, also drew the same comparison.
“I think it was a Y2K analogy where expectations of the worst happening just weren't there,” Stevens told CNBC.
While that may be true for some in the industry, others are reporting serious issues with TRID.
Earlier this week, HousingWire reported that several companies in the title industry have been experiencing unforeseen issues due to TRID, with one company reportedly electing not to participate in TRID loan closings due to the regulatory liability the rule presents.
And despite Cordray’s and Stevens’ assertions, TRID is not affecting every industry participant in the same way.
In fact, one industry source told HousingWire this week that many small lenders are “drowning under TRID.”
Cordray, whose speech was primarily focused on the credit card market, did not expand on the Y2K comparison or discuss what some in the industry are feeling about TRID.
Cordray did, however, discuss the perennially negative feedback the CFPB seems to receive whenever it introduces a new rule or policy.
“For all of us engaged in the important work of protecting consumers in the financial marketplace, we know that whenever we consider any new regulatory initiative, we can expect to hear that the ultimate effect will be to add costs that cause consumers to pay more,” Cordray said.
“We are warned that consumers will be priced out of the market. And we routinely hear that the cost of protecting consumers will be to constrict the availability of credit and even to drive some financial service providers out of business altogether,” he continued.
“Of course, we should and we will make sure that we are mindful of these concerns,” Cordray said. “We can draw up the greatest consumer protections ever devised, but if consumers cannot get access to credit, then there is nothing to protect. You cannot have responsible lending unless you have lending in the first place.”
Cordray went on to issue a colorful analogy about those in the industry who push back against new regulations.
“At the same time, we need to be wary of prophets of doom whose real agenda is to hamstring effective regulation in order to preserve predatory practices,” Cordray said.