Lenders and title and settlement agents bridged together at October Research, LLC’s 2016 National Settlement Services Summit (NS3), hosted in Charlotte, N.C., in a panel titled, “What a lender wants (what a lender needs).”
There, four lenders shared their thoughts on the mortgage market, third-party liability and pitfalls with the Truth in Lending Act (TILA) and Real Estate Settlement Procedures Act (RESPA) Integrated Disclosure rule (TRID).
“One thing I want to stress is this: TRID isn’t done yet,” Michael Malloy, vice president of servicing at Quicken Loans, told conference attendees. Malloy was referring to the Consumer Financial Protection Bureau’s (CFPB) intent to release a notice of proposed rulemaking (NPR) this summer to clarify certain TRID provisions.
Since TRID became effective Oct. 3, 2015, industry participants have asked the CFPB to provide clarifications regarding cure provisions, disclosures for construction-to-perm loans and third-party liability, among other concerns.
Malloy encouraged attendees to be sure to read the NPR when it is made available and to ask the CFPB for as much clarity on TRID as possible.
“The more clarity that we get that those minor errors are not fatal to the closing, the better that works, the more we can all move forward with life instead of worrying about whether a comma is out of place,” Malloy said.
Penny Reed, vice president of strategy and financial reforms at Wells Fargo, added that there are other nuances with TRID that are creating confusion, especially in areas where federal law and state law intersect.
“I personally believe that the CFPB built flexibility into the rule to account for a lot of the state nuances, but as a result that flexibility has ended up being uncertainty. Where do you use this piece of flexibility versus where do you use that piece of flexibility?” Reed said. “Then there are some things in the rule that are just not flexible and it’s causing challenges because it does run up against state practices or typical state behavior and in some cases, it runs up against state law.”
Another recurring hot topic with TRID is third-party and vender oversight.
In a letter to Sen. Bob Corker (R-Tenn.) CFPB Director Richard Cordray stated that “[w]hile creditors may enter into indemnification agreements and other risk-sharing arrangements with third parties, creditors cannot unilaterally shift their liability to third parties and, under the Truth in Lending Act, alone remain liable for errors on the [TRID] disclosures.”
Jason Brown, senior vice president and chief compliance officer at Evolve Bank & Trust, said that this has resulted in a paradigm shift, where certain responsibilities are shifting from Realtors to the lenders and title agents.
“Because the power and liability has been pushed back to us lenders – we are responsible for it all now, and we have to make sure that it’s done right – we really want to make sure that we are working with good partners that are getting the closings done, and that we are being protected and that everyone in the transaction is having a good overall experience,” Brown said.
Brown added now that TRID has been in operation for several months, the process among the various parties is been “smoothing out.” Iterations still occur, but Brown said that being able to get as much fee information upfront as possible helps.
Ben Harpenau, senior vice president and business controls manager at Bank of America, agreed that getting information earlier in the process is better, adding that Bank of America is working toward operational improvement and efficiency.
As for vendor oversight, Harpenau said that Bank of America looks very closely at consumer complaints, given the CFPB’s focus on consumer protection.
“If you are a small lender you can just as easily receive a consumer complaint about a TRID error as a large lender. So there is certainly oversight and I would say we look very closely at complaints. The CFPB is very responsive to complaints,” Harpenau said.