Mortgage stakeholders detail need for TRID hold-harmless period

May 15, 2015

WASHINGTON (5/15/15)--Witnesses representing a wide cross-section of the mortgage industry agreed at a congressional hearing Thursday that a safe harbor for the new integrated mortgage disclosure rule would be prudent.

The statements about the Consumer Financial Protection Bureau’s (CFPB) Truth in Lending Act-Real Estate Settlement Procedures Act integrated disclosure (TRID) rule were made at a hearing conducted by the U.S. House Financial Services subcommittee on housing and insurance to determine the costs and benefits to the rule.

“TRID will impact every mortgage loan made in the United States and, thus, has a great potential impact on the housing-finance market,” said Cynthia Lowman, president of the United Bank Mortgage Corp., testifying on behalf of the American Bankers Association. “It is critical that this rule is implemented smoothly so that it does not end up hurting creditworthy Americans that want to own a home.”

The rule is intended to simplify the forms and disclosures needed during the mortgage process, in order to make consumers more fully aware of the costs of the loan. It was finalized in 2013 and has an implementation date of Aug. 1.

CUNA supports a bill introduced by Reps. Steve Pearce (R-N.M.) and Brad Sherman (D-Calif.) that would enact a safe harbor until Jan. 1, 2016.

Rep. Blaine Luetkemeyer (R-Mo.), chair of the subcommittee, said it remains to be seen whether all parties will be prepared for the Aug. 1 implementation date.

“We continue to hear from businesses that tell us the industry and vendors simply aren’t ready for TRID, or the liability that comes with it,” he said. “This is despite having spent, according to some estimates, upwards of $100 million in new systems, vendors and education.”

Almost everyone at the hearing agreed that making the process simpler and safer for consumers is a positive thing.

“[The industry] is not asking to change or to challenge the rule, but they have expressed to me that they’d like to have a test-run, so to speak, for the rule,” said Rep. Joyce Beatty (D-Ohio). “They need a sort of preseason to figure out all the nuances.”

Several witnesses cited practical and technical needs for a safe harbor period.

“The Aug. 1 implementation date is too tight for many lenders. Yes, they’ve had 21 months to implement these changes, but lenders could not begin systems development until the data elements in the [Mortgage Industry Standards Maintenance Organization] was complete, and that happened three months ago,” said Laurie Goodman, center director of the Housing Finance Policy Center of the Urban Institute.

 Witness Diane Evans, vice president of the Land Title Guaranty Co., called TRID the biggest regulatory change she has seen in her 34 years in the business, and said the resulting paradigm shift will take all members of the industry, regardless of size, time to get it right.