CFPB’s TRID “Good Faith” Announcement

Clients and friends,

I wanted you to know that the CFPB announced this afternoon that they will be “sensitive” in their oversight to “good-faith efforts” to comply with TRID.  This announcement comes in response to the significant amount of pressure the industry placed on the CFPB on this issue, including a letter from 200+ members of Congress asking for a grace period until the end of 2015.  The announcement also describes the rule for providing an additional three-business day waiting period for the Closing Disclosure.  This announcement is available at: http://www.consumerfinance.gov/blog/know-before-you-owe-youll-get-3-days-to-review-your-mortgage-closing-documents/

While it is helpful that the CFPB will take good faith efforts to comply with the rule into account, there are two issues I want to point out.  First, the announcement does not provide any certainty regarding the time period it will apply to, or what they consider “good faith.”  Reliance on the CFPB’s “sensitivity” and a standard they don’t define may not be prudent.  In addition, there are other regulatory agencies that supervise for compliance with TRID.  It’s nice that the CFPB has spoken with them to “clarify this approach,” but the CFPB does not say these agencies will take the same approach.  There have yet to be any similar announcements from other agencies.

Second, the rule will still go into effect on August 1.  Without a delay of the effective date, there is still the potential of borrower lawsuits, including class actions, starting on August 1.  As I’m sure you’ve heard me discuss many times, the TRID rule greatly expands the potential civil liability for the disclosures.  TILA has civil and assignee liability for many of its disclosure provisions, while RESPA does not.  But the TRID rule relies on and implements TILA for most of its content and regulatory requirements, including those that were previously only required under RESPA authority.  This means that requirements such as the tolerances and the disclosure of settlement charges may now be the subject of borrower lawsuits under TILA.

In sum, even though this CFPB announcement is helpful, the rule will still go into effect on August 1.  And this means that compliance is still vitally important on August 1.

I am happy to discuss if you have any questions or concerns.