The door officially sealed shut on the ability for the industry to comment on the Consumer Financial Protection Bureau’s proposed updates to its Know Before You Owe mortgage disclosure rule.
In a surprise, but highly desired, gift to the industry, the bureau released a set of proposed updates to the Know Before You Owe mortgage disclosure rule, also called the TILA-RESPA Integrated Disclosures rule, TRID, at the end of June.
Once the Federal Register published the proposal, the industry had 64 days to comment. The final day to submit was this past Tuesday, Oct. 18.
But a lot of these have past, and once those problems subsided, mainly the secondary market was left to experience the biggest pain points from TRID at this point, which is a big reason the industry wanted the rule to reopen for changes.
Answering these calls, the proposed updates from the CFPB included a lot of areas that it where it asked for feedback. Besides the rule being open for comment in general, there were more than 100 instances in the rule that the CFPB specifically asked for comment. Simply searching the words “seeks comment” in the proposal generated 150 results on 23 pages.
When the proposal was first announced, the National Association of Realtors said that it secured a victory in the changes, noting that it would continue to monitor the progress on this important issue in the months ahead. One of the biggest points of contention is the rule centered on the rules around allowing lenders to share the Closing Disclosure form with “third parties” after receiving consent from the consumer.
In the association’s official comment letter on the rule, it expanded on this, saying: “As stressed by many other real estate professionals’ in their comments, the CFPB should maintain the language in the proposed rule acknowledging that sharing the CD with third parties is permitted as a record of the transaction to provide lenders and title agents with certainty of protection, and further emphasize that sharing the disclosures is required to increase consumer comprehension and avoid unnecessary and costly slowdowns for real estate closings.” Check here for the full 5-page letter from NAR.
Meanwhile, the MBA submitted a 20-page comment letter on rule. While the full letter can be found here, which includes in-depth detail on the requested changes, it wasn’t all bad things from the MBA.
“Before we offer our comments, however, we want to thank the bureau for proposing to clarify several key concerns,” it stated. These include:
- Cooperatives are covered by the KBYO Rule, regardless of whether the cooperative is treated as real property by state law
- The good faith standard under 1026.19(e)(iii) applies to the items identified in such section even when paid to affiliated service providers
- Informational Loan Estimates can correct information for consumers
- Redisclosure of a Closing Disclosure is not required because of changes in per diem interest at the time of consummation
- The rounding rules are simpler.
- Finally, we are particularly grateful for the bureau’s resolution of the “black hole” or authority to rebaseline the Closing Disclosure, which will help lenders and consumers more easily navigate unexpected events that might occur near the end of the home-buying process.
Now that the comment period is closed, the CFPB said it would weigh the concerns before final regulations are issued.