One Year Anniversary of TRID: Realtors and Lenders Still Having Trouble
October 3rd marked the one year anniversary of the Consumer Financial Protection Bureau’s rocky implementation of their 1,800-page TILA-RESPA Integrated Disclosure (TRID) or “Know Before You Owe” rule.
Created by the CFPB under the direction of Dodd-Frank, the new “Know Before You Owe” rule was designed to integrate Closing Disclosure (CD) forms and streamline the settlement process. Instead, the rule has increased errors on closing documents leading to more cancellations.
According to a survey of realtors conducted by the National Association of Realtors (NAR), reporting errors rose from 43 percent in the fourth quarter of 2015 to 50 percent in the third quarter of this year. Cancellations increased from 0.6 percent in the third quarter last year to 0.7 percent over the last three months.
The inaccuracies and cancellations are largely the result of a lack of regulatory clarity surrounding whether or not lenders may share Closing Disclosure (CD) forms with realtors without violating consumer privacy. Heritage Action sent a letter to the CFPB in July calling for clarification and ultimately legislative action.
The failed implementation of TRID has damaged the relationship between lenders, realtors, and homebuyers in an industry where strong relationships are essential for success. According to the recent NAR survey, 62 percent of realtors said the new settlement process is more difficult under TRID while only 12 percent said the process has gotten better.
Clarifying mortgage service guidelines is helpful, but the fact that the CFPB is so heavily involved is a more serious and enduring problem. Realtors and lenders would greatly benefit from legislative reform, such as the Financial CHOICE Act, which would curtail and rein in the power of the CFPB and eliminate or replace some of the worst provisions contained within Dodd-Frank.