Stevens: TRID Implementation Liability Concerns Remain

Shortly before the Oct. 3 implementation date of the Consumer Financial Protection Bureau’s TILA/RESPA Integrated Disclosure rule, the Mortgage Bankers Association released a survey showing one-third of lenders said they had “insufficient time” to test and integrate systems and train their employees and nearly half said the post October 3 transition period could create “significant problems” for their customers.   

Now, two and a half months in, MBA President and CEO Dave Stevens, CMB, said those concerns have manifested, with some technology vendors still unprepared to handle new forms and platforms and lenders facing continued confusion over lack of an explicit guarantee of protection from regulatory and civil liability.  

“There remains a point of confusion on how to apply the TRID rule to some unique situations,” Stevens said.  Stevens noted that from the CFPB view, the goal was to make things easier for consumers. “From the consumer perspective, it’s Y2K,” he said. “They like the forms and the majority of lenders say they will fund the loans. But behind the scenes, lenders and their staffs are working nights and weekends to make sure loans get closed. It’s wearing out staff and costing companies hundreds of thousands of dollars in overtime.”  

Additionally, Stevens said, many technology platforms were not prepared to handle all products. “We’re also hearing that there are settlement service provider issues–some understand the disclosure obligations, others do not,” he said. “In some cases, they’re not getting settlement numbers back to lenders in time.”  

Further, Stevens said, many lenders remain unsure how to act. “While the CFPB gave assurances that it would not engage in enforcement actions, it doesn’t protect the same investors from private actions or civil actions by other regulators, or through private lawsuits” he said. “We’re hearing from investors on this. We are told to expect a larger amount of mortgages that they won’t buy. This lack of clarity from the Bureau and this lack of protection regarding private actions have created a whole new level of concern regarding TRID compliance.”  

Stevens also noted there is contingent liability on the part of lenders and concerns about how loans are being viewed in the secondary market.   Stevens said MBA has been working diligently with the Bureau in providing them with a list of issues and asking for clarity, but noted the Bureau has been slow to respond.  

“Our goal now to get clarity from the Bureau on how to disclose items and how to cure them,” Stevens said. “We’re also talking very actively with investors who work in the correspondent channels to see how they will deal with errors. Finally, we still believe it would be extremely helpful if CFPB Director Richard Cordray would give an explicit directive that covers private litigation, because that would ease lender and investor concerns.”  

Stevens said TRID has been particularly problematic for independent mortgage banks. “I was recently in Denver, visiting with IMBs in their shops,” he said. “IMBs are incurring a lot of extra costs that could be resolved with more clarity and remedies from the Bureau.  

Additionally, Stevens met last week with leaders of a consumer group to discuss TRID issues. “They recognize this issue from the enforcement side,” he said. “We’ve been calling for greater clarity for some time; the Bureau needs to live up to its responsibility. This is not an isolated issue.”