Monthly Archives: June 2015

“CFPB changes TRID effective date — again”

Calendar dates from monday to sunday

CFPB changes TRID effective date — again

Proposal open for public comment until July 7 | by: Trey Garrison |

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The Consumer Financial Protection Bureau today issued a proposed amendment to the Know Before You Owe mortgage disclosure rule, which proposes to move the rule’s effective date to Oct. 3, 2015.

This comes mere days after CFPB Director Richard Cordrday said that the CFPB would delay the effective date of the TRID rule until Oct. 1.

Now, the CFPB has issued the actual proposal, with a proposed effective date of Oct. 3 instead.

The rule, also called the TILA-RESPA Integrated Disclosure rule, requires additional mortgage disclosure forms and a more complex compliance apparatus for lenders.

The required loan documentation consists of two new forms: the Loan Estimate and the Closing Disclosure to ensure compliance.

These new forms consolidate the TILA-RESPA forms and are meant to give consumers more time to review the total costs of their mortgage. The Loan Estimate is due to consumers three days after they apply for a loan, and the Closing Disclosure is due to them three days before closing. These two requirements have thrown the mortgage industry into a frenzy as they try to comply by the deadline.

The Bureau is issuing the proposal to correct an administrative error that would have delayed the effective date of the rule by at least two weeks, until Aug. 15 at the earliest.

National Association of Federal Credit Unions Director of Regulatory Affairs Alicia Nealon said CFPB missed the point and could do more.

“While NAFCU is pleased by the CFPB’s proposed extension of the effective date of the TILA-RESPA Integrated Disclosures, it is disappointing the CFPB has not taken this opportunity to permit an early compliance period that will provide credit unions with valuable time to test their systems before the implementation date,” said Nealon. “NAFCU will continue to urge CFPB to reconsider its position on this issue.”

This announcement comes shortly after huge news earlier this month, when the CFPB announced that it would allow a good-faith enforcement grace period that both the mortgage industry and a bipartisan coalition in Congress had asked for.

The Bureau said that it believes that moving the effective date may benefit both industry and consumers with a smoother transition to the new rules.

The Bureau also said that it believes that scheduling the effective date on a Saturday may facilitate implementation by giving industry time over the weekend to launch new systems configurations and to test systems.

A Saturday launch is also consistent with existing industry plans tied to the original effective date of Saturday, Aug. 1, the CFPB said.

The proposal will be open for public comment until July 7.

A copy of the proposal is available here.

“CFPB lists 10 compliance violation trends”

The questionnaire

“CFPB lists 10 compliance violation trends”

Cordray: Bureau ‘still finding runarounds’ | Brena Swanson

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After a year adjusting to new rules issued by the Consumer Financial Protection Bureau, some in the mortgage industry are still not up to code, the CFPB’s latest supervision report found.

The bureau’s eighth edition of supervisory highlights covers activities between January 2015 and April 2015, and resulted in remediation of $11.6 million to more than 80,000 consumers.

“We are extremely concerned that one year after the CFPB’s mortgage servicing rules went into effect we are still finding runarounds and illegal dual-tracking,” said CFPB Director Richard Cordray.

“Consumers deserve to be treated with honesty and integrity, and our rules require that servicers give borrowers a fair process when they try to save their homes. The CFPB will continue to stand beside consumers to make sure mortgage servicers are following the law,” Cordray added.

Under the Dodd-Frank Act, the CFPB has authority to supervise banks and credit unions with more than $10 billion in assets and certain nonbanks.

The CFPB’s last report resulted in remediation of $19.4 million to more than 92,000 consumers, along with six mortgage origination violations.

Here are the six mortgage origination violation trends the CFPB found:

1. Failing to establish and maintain written policies and procedures pursuant to the Loan Originator Rule

During the examination process Supervision determined that one or more supervised entities violated Regulation Z by failing to establish written policies and procedures as required by the rule. Specifically, Supervision found written policies on loan originator compensation and qualification and identification requirements without written procedures instructing employees on how to comply with the written policies. Supervision directed one or more supervised entities to develop, implement and maintain written procedures that provide comprehensive guidance to ensure and monitor compliance with the Loan Originator Rule as required by Regulation Z.

2. Failing to comply with disclosure requirements concerning the RESPA list of homeownership counseling organizations

During one or more examinations, examiners found that supervised entities did not fully comply with the disclosure requirements of Regulation X by failing to provide the list of housing counseling agencies to consumers. In particular, the housing counseling agencies lists did not contain the website address for each listed housing counseling agency because the vendors accidentally omitted the website data field. The supervised entities took appropriate actions to correct these violations.

3. Failing to fully comply with Regulation X requirements for the GFE

In one or more recent examinations, Supervision found the following violations of Regulation X: Failing to provide the consumer a GFE within three business days of receipt of a complete application; Failing to provide the consumer a timely revised GFE within three business days of receiving information to establish a changed circumstance; Failing to include all fees on a GFE.

4. Failing to fully comply with Regulation X requirements for completion of the HUD-1

In examining financial institutions, Supervision cited one or more instances of failure to ensure that the HUD-1 settlement statement accurately reflects the actual settlement charges paid by the borrower.

Generally, this violation was indicative of weaknesses in training, monitoring and corrective action, and compliance audit. Supervision directed one or more supervised entities to review their loan files and refund the appropriate amounts to affected customers.

5. Deceptive practice from overly broad release in home equity installment loan agreements

Examiners concluded that such a general waiver provision is a deceptive practice because it implies that the borrower is agreeing to a waiver that is unenforceable as to any claims based upon a Federal statute. A reasonable consumer might be misled into believing that by signing the note they had waived all notices or demands in connection with the delivery, acceptance, performance, default or enforcement of the note and would therefore be less likely to assert his or her Federal statutory rights. Supervision directed the supervised entities to cease requiring consumers to sign note agreements with waivers that appear to waive rights that may include Federal statutory claims or defenses and provide borrowers who received the broad waiver language with a more limited waiver.

Here are four mortgage servicing violation trends the CFPB found: 

Check the report for the full list of violations.

1. Loss mitigation:

Regulation X sets forth requirements for soliciting, completing, and evaluating loss mitigation applications. As part of these requirements, servicers must notify borrowers in writing within five days after receiving a loss mitigation application acknowledging that it received the application, and stating whether it is complete or incomplete. If the application is incomplete, the servicer must list in its notice the additional documents and information the borrower must submit to complete the application, often called “acknowledgement notices.”

Examiners found that at least one servicer sent borrowers loss mitigation acknowledgment notices requesting documents, sometimes dozens in number, inapplicable to their circumstances and which it did not need to evaluate the borrower for loss mitigation

2. Foreclosure Process

In reviewing the loss mitigation and foreclosure process, examiners also found certain unfair and deceptive practices. At least one servicer sent notices of intent to foreclose to borrowers already approved for a trial modification and before the trial modification’s first payment was due without verifying whether borrowers had a pending loss mitigation plan before sending its notice.

CFPB examiners found at least one servicer sent notices warning borrowers who were current on their loans that foreclosure would be imminent.

3. Regulation Z disclosures

Regulation Z requires servicers to send periodic statements each billing cycle that display clearly and conspicuously in writing, content that includes the account’s transaction history encompassing any activity that causes a credit or debit to the amount currently due

4. Homeowners Protection Act

The Homeowners Protection Act requires automatic termination of borrower-paid private mortgage insurance (PMI) when the mortgage balance is first scheduled to reach 78% of the original value of the property securing the loan, if the borrower is current on the termination date, or, if the borrower is not current, on the first day of the first month beginning after the date that the mortgagor becomes current. For fixed rate mortgages, the timing is based on the initial amortization schedule for the mortgage.

“The Top 5 Things to Know About TRID Now”

cropped-caltitlenewsrevised.jpg“The Top 5 Things to Know About TRID Now”

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Now, still only weeks away from TRID’s (TILA-RESPA Integrated Disclosure Rule or Rule) effective date, lenders, realtors, and settlement agents need to be taking stock of their preparedness and communicating among themselves and with consumers about what to expect come October 1, 2015. We asked three individuals from organizations recognized as industry leaders who have been dedicated to implementing TRID on time and in compliance to name their “Top 5” for TRID compliance. These thoughts are intended to help you ensure you’re prepared and to provide insights on issues you need to consider prior to the effective date. Hopefully, their advice is helpful to your organization as it nears the deadline for implementation.

The Lender’s PerspectiveFirstChoiceLoanServices
Joshua Weinberg
SVP Compliance
First Choice Loan Services, Inc.

  • Be ready! Prudent lenders have been preparing for these changes for over a year and working closely with business partners to ensure things go smoothly. That includes building back up plans, adding resources, and training. Even though we got the grace period, it’s a mistake to slow down efforts to implement. The extra time is needed to test systems and procedures, and to ensure all the kinks are smoothed out.
  • Use compliance as a competitive advantage. The technology and tools available can help reduce the impact of many of the most challenging obstacles of complying with the Rule.
  • Leverage secure technology. Electronic disclosures and e-signatures can shorten the loan process by almost two work weeks compared to using U.S. mail.
  • Master the 3-day waiting period. The timely Closing Disclosure levels the playing field among all lenders. Those with well thought through procedures have an advantage.
  • Communicate about decisions regarding who will Issue and manage the Closing Disclosure. Put processes in place to ensure accuracy and allow you to remain as nimble as possible to accommodate changes quickly.

The Realtor’s Perspective
Ken Trepeta
Director, Real Estate Services
National Association of Realtors (NAR)

  • Add 15 days to your transaction time. If you could normally close in 30 days, make the contract 45. TRID does not sufficiently address the “unexpected;” the stranger the deal, the more potential for issues, so give it more time.
  • Manage Closing Disclosure timing. Borrowers must receive the Closing Disclosure (CD) at least 3 days before closing and sellers no later than day of consummation. NAR helped win limited circumstances that trigger waiting periods after a revised CD is issued. The big impact is that lenders will review, approve, and issue every change, because they are fully liable for everything on the CD, so last minute changes could be problematic. As soon as a change is known, it must be communicated to the lender.
  • Track progress studiously. Realtors, loan originators, and everyone with direct consumer contact must stay on top of their transactions and customers. Closing documents need to be ready well in advance of the Closing Date. Loans closing on the 30th of the month should be prepared to close by the 23rd. Buyers shouldn’t expect to make changes, and sellers shouldn’t do anything that could cause a change at the table.
  • Embrace the deadline. TRID is effective for applications received on or after October 1, 2015. NAR’s fight for a grace period and more guidance helped contribute to achieving a delay to the Rule, but everyone should still be making efforts to ensure they’re prepared for October 1st.
  • Focus on three things between now and October 1st: (1) maintaining regular contact with your business partners (lenders, title providers, vendors, etc.); (2) avoiding last minute changes on your end; and (3) helping your business partners avoid last minute changes on their end.

The Settlement Agent’s Perspective
Steve Gottheim
Legislative and Regulatory CounselALTA-Logo-Vertical-4-color
American Land Title Association (ALTA)

  • Check title fees. TRID requires the accurate disclosure of title insurance premiums in 43 states. This presents two challenges. First, the title industry must resolve how to disclose premiums accurately to consumers without confusing them. The industry will need to figure out how to explain this issue to consumers in a manner that does not cause them to distrust the transaction. Second, title providers will need to determine what information lenders will want to produce accurate Loan Estimates (LE) and CDs. If a lender is gaining LE information from a historical database of closed transactions, this could lead them to incorrectly disclose the title fees on the LE and create a tolerance problem later.
  • Be aware of the process change. Today, the HUD-1 is entirely in the settlement agent’s control, and they can establish one process for its completion in all transactions; however, the CD is a lender document. Settlement agents will have to use different processes in deals with different lenders, making it more difficult to train staff and especially difficult to centralize or build efficiency into process.
  • Address the shopping list. One of the big goals of TRID is to promote consumer shopping at both the loan/lender stage and the provider stage. However, many of the requirements, such as tolerances and the shopping list concept, may create hindrances to shopping or require settlement agents to market themselves differently. After 2010, many agents wanted to be on the lender’s shopping list because it was crucial to getting business, but, under TRID, it may be advantageous to be off the list.
  • Set the right expectations. There are a number of common real estate practices that will be more difficult or even impossible to do after October 1st. It’s important to set the right expectations with customers, realtors, and lenders to help them understand things like critical dates per the sale agreement, the amount of time it takes to make changes to the deal, and when changes may cause delays to closing either because of the three-day rule or process requirements.
  • Data accuracy is paramount. When you boil it down, TRID really makes two critical changes. First, it requires new timing for the CD. Second, it requires a higher level of accuracy of transactional details early in the process. Successful settlement agents will figure out how to ensure that lenders don’t have to think twice about data they possess about the agent. Not only should agents think through how to provide lenders an easy way to validate their fee and rate data, but also instill confidence that lenders can trust that they are dealing with the correct company. We think the ALTA Universal ID, a universal identification number for settlement agents that simplifies and streamlines the lookup of agent qualifications and best practice certification for and across different participants in the loan closing lifecycle, will become a useful industry utility.

October 1st may now mark the mandatory deadline to commence TRID implementation and you should use the 60-day delay to ensure everything still needing to be done gets finished and done right. Don’t stop there; from October going forward, continue to employ the ‘Top 5’ ideas presented here and the experience you have with your own TRID implementation to tweak and improve the process.

NEWS FLASH!!!! “Statement by CFPB Director Richard Cordray on Know Before You Owe Mortgage Disclosure Rule”

Jun 17 2015

Statement by CFPB Director Richard Cordray on Know Before You Owe Mortgage Disclosure Rule

WASHINGTON, D.C. — Today, Consumer Financial Protection Bureau (CFPB) Director Richard Cordray issued the following statement on the Know Before You Owe mortgage disclosure rule:

“The CFPB will be issuing a proposed amendment to delay the effective date of the Know Before You Owe rule until October 1, 2015. We made this decision to correct an administrative error that we just discovered in meeting the requirements under federal law, which would have delayed the effective date of the rule by two weeks. We further believe that the additional time included in the proposed effective date would better accommodate the interests of the many consumers and providers whose families will be busy with the transition to the new school year at that time.”

The public will have an opportunity to comment on this proposal and a final decision is expected shortly thereafter.

###The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit

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