CFPB to Assess TRID Rule’s Effectiveness

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[author: Amanda Phillips]

The Dodd-Frank Act requires the CFPB to conduct an assessment of each “significant rule” adopted by the Bureau. The Bureau has determined that the TILA/RESPA Integrated Disclosure (TRID) Rule qualifies as a “significant rule.” Assessment reports must be published no later than five years after the effective date of the rule being assessed. The TRID Rule’s original effective date, prior to its amendments, was October 3, 2015.

In connection with its assessment of the TRID Rule, the Bureau issued a request for information (the RFI) on November 20, 2019, which was published in the Federal Register November 22, 2019. The goal of the assessment is to address the TRID Rule’s “effectiveness in meeting the purposes and objectives of” title X of Dodd Frank, as well as “specific goals stated by the Bureau.” 12 U.S.C. 5512(d)(1).

The Bureau plans to conduct its assessment utilizing a “cost-benefit perspective,” focusing on the TRID Rule’s impact on consumers, firms (creditors, settlement service providers, mortgage brokers, etc.), and markets related to mortgage origination using a variety of information collection methods. Some of those methods include the utilization of internal Bureau data, data collected by the Bureau pursuant to regulation (such as HMDA data), industry surveys, and structured interviews. The RFI outlines the following broad questions that the Bureau will consider in examining the TRID Rule’s impact:

Consumers

  • How did the TRID Rule affect the consumers’ understanding of their mortgage disclosures?
  • How did the TRID Rule affect mortgage and settlement service shopping behaviors?
  • How did the TRID Rule affect satisfaction with their mortgage disclosures, mortgage products, and settlement services?
  • How did the TRID Rule affect ability to compare and choose among mortgages and settlement services?

Firms

  • What were the TRID Rule’s implementation costs to firms?
  • What are the TRID Rule’s ongoing costs to firms?
  • How did the TRID Rule affect creditor’s ability to sell mortgages to others on the secondary market?
  • How did the TRID Rule affect the way creditors disclose information to consumers?

Markets

  • Did the TRID Rule affect the price of mortgages or the volume of mortgage originations in the aggregate or for particular market segments or mortgage product types (e.g., construction loans, subordinate liens, manufactured housing, etc.)?
  • Did the TRID Rule affect entry, exit, or consolidation in any parts of the mortgage market?
  • Did the TRID Rule’s specific provisions affect market structure by changing the relationship between various providers (e.g., creditors and settlement agents or creditors and their affiliates)?

The Bureau is seeking public comments relevant to the issues identified in the RFI, “any other information relevant in assessing the effectiveness of the TRID Rule in meeting the purposes and objectives of title X of the Dodd-Frank Act and the specific goals of the Bureau,” and in particular any or all of the following:

  • The feasibility and effectiveness of the assessment plan, the objectives of the TRID Rule that the Bureau intends to use in the assessment, and the outcomes, metrics, baselines, and analytical methods for assessing the effectiveness of the TRID Rule as described in the RFI;
  • Data and other factual information that the Bureau may find useful in executing its assessment plan and answering related research questions, particularly research questions that may be difficult to address with the data currently available to the Bureau, as described in the RFI;
  • Recommendations to improve the assessment plan, as well as data, other factual information, and sources of data that would be useful and available to the Bureau to execute any recommended improvements to the assessment plan;
  • Data and other factual information about the benefits and costs of the TRID Rule for consumers, creditors, or other stakeholders;
  • Data and other factual information about the effects of the TRID Rule on transparency, efficiency, access, and innovation in the mortgage market;
  • Data and other factual information about the TRID Rule’s effectiveness in meeting the purposes and objectives of title X of the Dodd-Frank Act, which are listed in the RFI;
  • Data and other factual information on the disclosure dataset specified in the Assessing Firm Effects section of the RFI;
  • Any aspects of the TRID Rule that were or are confusing or on which more guidance was or is needed during implementation including whether the issues have been resolved or remain unresolved; and
  • Recommendations for modifying, expanding, or eliminating the TRID Rule.

Because Congress directed the CFPB to develop integrated disclosures under the Truth in Lending Act and Real Estate Settlement Procedures Act, and the industry has undertaken a complex and expensive implementation, it is unlikely that the CFPB will eliminate the TRID Rule. Industry has found the TRID Rule to be overly complex and prescriptive, and require disclosures that often do not reflect real world pricing or values (e.g., the methodologies to disclose title insurance premiums and the items in the Calculating Cash to Close table of the TRID Rule disclosures). Significant modifications to the TRID Rule are necessary to streamline and simplify the rule for the benefit of consumers and the industry.

Comments on the RFI must be submitted by January 21, 2020.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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