CUs need written guidance, rule amendments on major TRID areas: CUNA

April 6, 2016

WASHINGTON (4/6/16)--A number of major areas in the Truth in Lending Act-Real Estate Settlement Procedures integrated disclosure (TRID) rule need written guidance or rule amendments, the Credit Union National Association (CUNA) wrote Tuesday. Responding to a question from Reps. Blaine Luetkemeyer (R-Mo.) and Randy Neugebauer (R-Texas), CUNA President/CEO Jim Nussle outlined those areas in need of additional guidance.

“While we acknowledge that the TRID rules have only been in effect since October 3, 2015, certain trends and issues have quickly become apparent,” Nussle wrote. “For credit unions in general, the total effect of this overhaul has slowed the economic recovery, and for some credit unions, it has resulted in them leaving the market, reducing choices for consumers.”

CUNA is committed to assisting its member credit unions with TRIDcompliance. However,the overlapping, inherent complexities present in the Consumer Financial Protection Bureau’s (CFPB)rule often overlap with various state laws governing insurance, lien laws, contract laws and others.

“Based on input from our members, what is needed, and has not occurred, is meaningful and constructive engagement by the CFPB on the TRID regulation,” Nussle wrote. “Specifically, our members seek written guidance or alternatively, rule amendments that will bring certainty and clarity to the marketplace.”

CUNA remains concerned that, despite recent comments from CFPB Director Richard Cordray that regulatory agencies continue to provide “regulatory restraint” for good-faith efforts at TRID compliance, the statements do not provide any immunity from legal liability.

“Even what might be considered technical clerical errors could be problematic for credit unions,” Nussle wrote. “Without certainty on the liability, the industry will continue to proceed in the most conservative and cautious manner; this approach is already manifested itself in the secondary market with investors either rejecting or refusing to purchase loans, which ultimately leads to fewer consumer choices.”

Some of the other major areas where written guidance or rule amendments are needed are:

  • Ability to cure errors or defects: The CFPB should clarify the ability to cure an error under TRID rules, to present investors and due diligence firms from treating clerical errors as non-compliance with TRID;
  • The “black hole:” When a borrower’s request leads to delayed closings, the TRID rule is not clear whether a revised closing disclosure can be used to adjust for charges. Ultimately, this can unnecessarily delay a closing, hence the moniker the “black hole;"
  • Construction loans: Significant confusion continues to exist on how to properly disclose construction loans under the new disclosures. No examples are provided and there is no written transcript of a recent webinar on such loans;
  • Title premiums: Certain state title insurance regulations result in the imposition of a premium; when this is disclosed on the TRID forms, the premium disclosure has a negative number. The rules need to be clarified as to how a negative number can be disclosed, as the current TRID rules prohibit this;
  • Lender credits and principal reduction: Disclosure of principal reduction or certain lender credits remains unclear as to the proper disclosure mechanism;
  • Cooperative loans: State laws differ on how cooperative loans are treated, so there is confusion over which forms are proper for the particular transaction. CFPB needs to provide written guidance to cover these situations; and
  • Cash to close: Mathematical restrictions and inconsistencies on the “cash to close” table on the TRID forms can at times place an institution in the situation of being unable to comply fully with the disclosure requirements.