Cordray Says Lenders Can’t ‘Unilaterally’ Shift TRID Liability to Settlement Agents

April 8, 2016

TitleNews Online | April 8, 2016

Responding to a letter from U.S. Sen. Corker, Consumer Financial Protection Bureau Director Richard Cordray wrote that lenders may not shift liability for errors on the Know Before You Owe mortgage disclosures to third parties.

"While creditors may enter into indemnification agreements and other risk-sharing arrangements with third parties, creditors cannot unilaterally shift their liability to third parties and, under the Truth in Lending Act, alone remain liable for errors on the Know Before You Owe mortgage disclosures," Cordray wrote.

Cordray did write that lenders and settlement agents are free to decide how to divide the responsibility and risk when implementing the new requirements through contracts, however, he added creditors “alone remain liable for errors on the Know Before You Owe mortgage disclosures.”

In March, Corker warned Cordray about implementation issues and consumer confusion regarding TRID.

Corker’s office reached out to ALTA after a constituent in Tennessee contacted his office about TRID’s misleading and inaccurate approach of disclosing title insurance premiums. ALTA briefed Corker’s staff on key TRID concerns including the inaccurate disclosures of title insurance premiums, the need for more written guidance to clarify conflicting interpretations of compliance, lender attempts to inappropriately shift TRID liability through written closing instructions and third-party vendor management.

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