As the Consumer Financial Protection Bureau (CFPB) works to refine the rules it has established for our industry, we are called upon to provide comments to help the Bureau work through that process, and having lived through the earlier iterations of the CFPB’s rules, it is in our best interest to do so.
Most recently the CFPB asked for comments on its TRID proposed changes, and we felt it was important to provide a comment letter because we have witnessed firsthand the struggles our clients have had adjusting to the TRID rules. It has become clear that the current rule still has much ambiguity that has caused some confusion in our industry. Over the past year, we have worked very closely with LOS providers and our clients’ internal counsel to provide automation that allowed them to operate according to their own interpretations of the rule, which varied widely.
Reasons for writing the letter
Our primary goal in presenting a comment letter to the CFPB was to encourage a more uniform interpretation of the TRID rule. We believe this will benefit our lender clients, to be sure, but it will also benefit the end consumer. Ultimately, we all must keep the consumer in mind, and our comments are aimed at improving the mortgage borrowing experience.
While our comments were extensive and covered many aspects of the TRID rule, there are three areas we felt were very important for the CFPB to consider:
Making sure that calculating the Cash to Close table would work
The current TRID rule is not clear on how the lender should calculate Cash to Close. While specific guidelines were provided on preparing the Loan Estimate, the same level of clarity was not provided for the Closing Disclosure. This has led to a variety of interpretations which are likely to be confusing to consumers. This should be clarified.
Clearing up the rounding issue
In order to meet the various interpretations of the TRID rule, we have been forced to build many settings into our software to address rounding. While CFPB has provided some verbal guidance from time to time, the rule itself has not been clarified. This can lead to consumer confusion and a difference between the Closing Disclosure and Loan Estimate that can lead to errors for which there are no clear remedies.
Providing sufficient time to implement new solutions
We worked to make it clear in our letter that, as the CFPB continues its work of refining the rules, time will be required to implement the new solutions. Docutech and its clients are fortunate as our dynamic document system allows for rapid implementation of regulatory changes, but not all vendors have this capability and we hope the regulator will allow for that in its rulemaking.
Our hope for the future
The CFPB will do as it wishes with all of the industry commentary it receives, as is its right. However, we hope they will amend the TRID rule in a fashion that decreases overall ambiguity for the industry. Failure to do so will lead to increased uncertainty amongst lenders that will ultimately hurt the consumer. The revised rule will help lenders make better sense of their options. A clear rule will also open the door to increased innovation and efficiencies in the market and will ultimately increase the value of these new disclosures to consumers.