Recently, the CFPB proposed updates to the final TRID rule. The intent was to address frustrations around closing loans on time while assuring compliance.
But the CFPB did not change its stance on technical TRID violations and their respective curable timelines—meaning lenders are still held liable for those violations post-closing.
Andy Arculin, former senior counsel at the CFPB, who was responsible for developing and implementing TRID and various other rules, presented a webinar last year titled “Mortgage Investors: The Real Regulators.” In light of this recent news, a question asked during the webinar is worth looking at again:
Question: The way I look at it, we (the lender) already are responsible for everything. How does TRID increase our liability with both regulators and investors in addition to what we have today?
Andy Arculin’s answer:
The lender is technically responsible for everything today [pre-TRID*]. There are a couple of ways this complicates things.
One, the liability risk is a lot more substantial. There are a lot of confusing aspects to the RESPA GFE rules that I think everyone got comfortable enough with, but the threat of a private lawsuit really just wasn’t there.
An example is the 10% tolerance in Reg X—I don’t know if anyone ever really fully understood how it’s supposed to work, and HUD never explained it. But everyone started doing it a certain way and it wasn’t something that was subject to private liability where a court could really come in and undermine what they’d done. Now everything’s under Regulation Z and potentially carries with it TILA liability. That is a pretty big change. The TILA disclosures have always had liability, but today’s [pre-TRID*] TILA disclosures really aren’t that complicated. These are a lot more complicated.
The lender also is legally considered the party doing the disclosures, even in a broker transaction. The lender can’t take a package from a broker and consider that receipt of the application. If a lender is doing work with a broker, the broker is presumed to be acting on behalf of the lender, making a disclosure in the lender’s shoes.
These changes haven’t necessarily increased responsibility that much, but they’ve increased exposure. In general, these are just harder forms. They’re a lot more detailed, a lot more technical. And now everything is potentially subject to scrutiny, whereas before RESPA and the GFE rules weren’t tightly enforced and there was no private right.
* Brackets added
Almost a year later, TRID continues to affect lender liability. It is vital for lenders to be able to cure their TRID errors before their timelines run out, or even before they become violations.
With ATS Secured’s transparent solutions, TRID errors are brought to light quickly—even before closing. Our technology doesn’t just get rid of TRID errors—it can help prevent violations in the first place to significantly decrease lender liability.
Contact us today for help with your TRID compliance needs!
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