Looking Back, and Ahead, at TRID

The Consumer Financial Protection Bureau (CFPB)’s TILA-RESPA Integrated Disclosure Rule (TRID), also known as the “Know Before You Owe” mortgage rule, passed its one-year anniversary on October 3.

In the months leading up to the rule, lenders everywhere expressed concerns about making modifications to their systems and processes to be TRID-compliant in time for the rule’s enaction. The original TRID effective date of August 1, 2015, was pushed back by two months by the CFPB due to an “administrative error.”

One year after TRID has gone into effect, the predictions of gloom and doom for the mortgage originations process did not come true, according to Bob Dougherty, VP of Business Development with software solutions provider CalyxSoftware.

“I think we can all agree that the goal of TRID—making the mortgage process and closing process more transparent and easier to understand—was laudable and beneficial to consumers,” Dougherty said. “Also, predictions that the origination process would grind to a halt were certainly exaggerated.”

Bob Dougherty

After receiving some feedback from the industry on TRID in the rule’s first six months of existence, CFPB Director Richard Cordray wrote a letter in April to financial industry trades and their members recognizing the “operational challenges” the industry is experiencing as a result of TRID implementation and said that the Bureau was considering making some “adjustments” in the regulation text to provide greater certainty and clarity. In late July, nearly 10 months after the rule took effect, the CFPB issued the long-awaited proposal to adjust TRID, which some within the industry deemed “TRID 2.0.”

Under the proposal, recording fees and transfer taxes may be charged in housing assistance loans originated by housing finance agencies without losing eligibility for a partial disclosure exemption; TRID’s coverage would be extended to include all cooperative units, thus simplifying compliance; and the proposal contains commentary clarifying how a lender may provide separate disclosure forms to the consumer and the seller.

“The guidance from CFPB could have been more detailed and timely, and the delay created some challenges for mortgage technology providers, clients and investors,” Dougherty said. “The good news is that TRID 2.0 appears to clarify some of the issues that have been the most nettlesome. But, as was the case with the original TRID rule, the new changes will require significant revisions in technology, workflow processes and training. All of which will raise the cost of origination and eventually have the unintended consequence of pushing up the cost of getting a mortgage.”

The CFPB is accepting public comments on the proposal for TRID until October 18, 2016. Click here to view the CFPB’s full proposal.