The Consumer Financial Protection Bureau TRID rule is finally up for revisions after industry cries for changes and clarifications.
However, despite the resounding call for help, the end product is likely to underwhelm, according to a note from investment firm Compass Point Research & Trading.
Indeed, everyone HousingWire spoke to about TRID so far, albeit a hand full of experts, all seem to agree the new rules create more problems than it solves. So, this begs the question: Do you think CFPB TRID changes will heal mortgage market pain? Yes or no, please leave your comments in the message boards below.
First, some more background: The CFPB shocked the industry back in April when it announced it would take another look at the Know Before You Owe rule (aka TILA RESPA Integrated Disclosure). A letter from the CFPB to eight industry trade groups at the time acknowledged their concerns over compliance with the coming mortgage disclosure forms. That same letter also informed the mortgage finance industry that the bureau began drafting a Notice of Proposed Rulemaking on the Know Before You Owe rule.
This opened the potential changes to a comment period, to which the mortgage finance industry responded in kind.
CFPB Director Richard Cordray stated in the letter:
We have begun drafting a Notice of Proposed Rulemaking on the Know Before You Owe rule. We hope to issue the NPRM in late July and look forward to your comments on it then. The Office of Financial Institutions, along with our Regulations and Markets team, will arrange one or two meetings in late May or early June, but before the NPRM is issued, to discuss further with you the Know Before You Owe rule. In the meantime, we look forward to continuing to receive your detailed feedback on the implementation of the Know Before you Owe rule.
In response, the aforementioned Compass Point note to clients cautioned, “We expect this effort to address particular concerns such as procedures for numerical error correction but we urge caution as the forthcoming fix is unlikely to alleviate the totality of industry concerns and it will not be finalized until 2017.”
Next year will seem far for certain mortgage investors, given that the secondary market that seems to be experiencing the biggest pain points from TRID now.
Chris Katopis, executive director at the Association of Mortgage Investors, recently told HousingWire, "The lack of clarity from CFPB has led to originators being unable to sell what would otherwise be considered good loans in the secondary market. This has led to at least one large originator being forced to close its doors. Others will follow."
Pete Mills, senior vice president of residential policy and member engagement with the Mortgage Bankers Association, also agreed with Katopis in the above linked article, and added: "The time-to-close argument has never really been an issue. The industry threw a lot of resources at that," said Mills. "The real issue has been the diversity of opinion around certain aspects of TRID that has created some impediments on the flow from the originator into the secondary market."
One plan that aimed to help lenders in the meantime is stuck in limbo after series of attempts to get it passed.
The Homebuyers Assistance Act, H.R. 3192, which was sponsored by Rep. French Hill, R-Ark., provides a four-month grace period for businesses that are working in good faith to comply with TRID.
The bill was welcomed by the industry after the new disclosure rule went to effect because of a lack of clarity, which still exists, regarding how it was going to be enforced.
