TRID Week 1 Developments

Clients and Friends,

I hope TRID week one is going well!  I wanted you to know about two recent TRID developments:

  1. Fannie Mae and Freddie Mac are providing a temporary transition period for TRID, similar to the CFPB.  The GSEs released similar letters on October 6, stating that they will not review loans for technical compliance with TRID until further announcement.  Please note that they will check whether the correct forms were used in connection with the loan.  In the letter, the GSEs stated that they will only exercise contractual remedies for noncompliance with TRID, including repurchase, in two circumstances: (1) the required form is not used, or (2) a particular provision would impair enforcement of the note or result in assignee liability, and a court, regulatory agency, or other authoritative body has determined that the practice violates TRID.
  2. The House of Representatives yesterday passed H.R. 3192, the Homebuyers Assistance Act, which provides for a statutory “hold harmless” period for TRID.  The bill would prevent enforcement or civil liability for noncompliance with TRID for loans originated before February 1, 2016, if acting in good faith to comply.  The vote was 303 to 121.  However, the day before, on October 6, the White House announced that the President’s senior advisers would recommend that he veto the bill if it passed.  The White House’s statement described the bill as an “unnecessary delay…of important consumer protections designed to eradicate opaque lending…and undercut the Nation’s financial stability.”  It remains to be seen whether the Senate will have a veto-proof majority.  But remember that back in 2012 the President held the Loan Estimate up at an event focusing on housing, stating, “so this is what a mortgage form should look like….  Simple, not complicated.  Informative, not confusing.  Terms are clear.  Fees are transparent.”  It would appear that the President is likely to follow through with this veto threat.

And I’ll briefly mention another topic that has been in the news.  The CFPB announced yesterday that it is considering a proposal to ban arbitration clauses that prevent consumers from class action lawsuits from contracts for consumer financial products and services.  For other arbitration clauses that remain permissible, the proposal would require the reporting to the CFPB of the arbitration claims filed and the awards, so the CFPB can monitor them for fairness, and publicly post them on its website.  This kicks off the SBREFA panel process for this proposed rulemaking, which the CFPB must complete before it issues a proposed rule.  Note that the Dodd-Frank Act already prohibited arbitration agreements in residential mortgage loan notes, which is implemented in Regulation Z.  Accordingly, the CFPB is not considering including an explicit exemption for residential mortgage lending from its proposal.

By the way, I’m speaking at ALTA’s Annual Convention today, in the TRID Solution Center.  Please stop by and say hello!