MBA Survey: One-Third of Members Still Unprepared for TRID
The Mortgage Bankers Association, in a survey released last week, illustrated to the Consumer Financial Protection Bureau its continued concerns that a lack of a formal compliance grace period could make the Bureau’s TILA/RESPA Integrated Disclosure rule harmful to consumers, lenders and vendors.
MBA released results of a survey showing the implementation date and lack of a formal compliance grace period could put consumers at risk of missed closings, blown rate locks, and other potential costs.
The survey assesses how more than 70 MBA member company executives–a cross section of large and small, bank and nonbank–think that the Know Before You Owe implementation will impact their customers during the transition period and how it could impact the broader market. “We believe the results highlight the need for more explicit CFPB action instituting a formal enforcement grace period,” said MBA Senior Vice President Residential Policy and Member Engagement Pete Mills.
Key results of the survey:
–Two-thirds of the companies say they are ready for Know Before You Owe and with little or no worry. However, one-third of the respondents indicate that they have had insufficient time to test and integrate systems and train their employees.
–Nearly half of the company executives say they are concerned that the post October 3 transition period to the new Know Before You Owe systems and disclosures will create significant problems for their customers.
–Nearly half of these industry leaders say the overall impact of TRID during the next few months–based on their own company’s experience and their knowledge of broader industry implementation efforts–will be significantly negative for consumers (“…significant numbers of home purchase transactions will blow up or close late, adding a cost burden to resolve”).
“MBA believes the Know Before You Owe rule will make the mortgage process better for consumers,” Mills said. “However, as the survey shows, implementation has proven far more difficult than both industry and the CFPB anticipated due in large measure to the complexity of the technology and systems that have put in place over the years and the challenges of integrating separate systems across the industry. There also continue to be reports that some vendors have not delivered systems in working shape. These issues are not isolated, as a significant proportion of the industry is concerned that their customers are at risk of failing to close or incurring additional costs in the first few months following the October 3 effective date.”
MBA reiterated its belief that the CFPB should consider steps to ensure consumers are protected from these transition risks. It urged the CFPB to issue an emergency rule instituting a formal enforcement grace period–including protection from private litigation–that would provide lenders the flexibility to deviate from strict compliance with the Know Before You Owe if it is the consumer’s interest (e.g., to close a purchase in a timely manner).
“A 120-day grace period will provide lenders, settlement service providers and the Bureau the additional time needed complete the transition to the new systems, monitor implementation challenges and address any adverse consumer or market impacts,” MBA said.
