The industry was celebrating as the CFPB announced that it was delaying the implementation date of the new TRID regulations set for August 1st. While the Bureau blamed the two month delay on an error in following government regulations, many believe that it is due primarily because of pressure from lenders, realtors, consumers and Congress. Regardless of why it occurred, the end result is that we have an additional two months to prepare.
In case you have been living in a cave for the past few years, TRID is the new regulation defining how lenders are to handle informing consumers about the costs of their mortgage transaction. The previous disclosures, which everyone acknowledged did more to confuse borrower than educate them, were replaced by a new Loan Estimate at application and a subsequent Closing Disclosure. The Closing Disclosure was to be given three days prior to closing, which theoretically allowed borrowers the time to decide if they really want to spend this much money.
The question surrounding this announcement is whether this is a good or bad thing. On one hand, lenders, title companies and technology firms have devoted an unaccountable number of hours working on process changes, system updates and internal training requirements. It almost seems as if this delay is a letdown for these folks that have worked so hard to meet the deadline. Another thing to consider is the fact that if we had not had a delay and implemented on August 1st, we would have the chance to really identify where this worked and where it didn’t. In some ways this delay reminds me of delaying the dentist appointment time and time again hoping that somehow those cavities will magically disappear over time. Instead it would be much better to just get it over with.
However we have to recognize that there really were problems. One industry executive commented that the changes actually meant that there were over 2500 calculation changes in their LOS system that had to be programmed and tested. This seemed like an impossible task to complete when the programming wasn’t going to be completed until the middle of July. Furthermore the regulations contained many ambiguous directives and this delay may provide the CFPB with time to issue some clarifications that are needed.
Others seem to believe that the delay was actually the due to associated third parties that really had no idea what the changes meant to them in their piece of the process. Just last week I was talking to a realtor who admitted that she was clueless when it came to what the TRID changes meant to her clients or how to explain what was going to happen. So if these vendors are so unprepared, will two much do much to change that situation?
The question for me is how much time, if any, will the CFPB give all parties to work out the kinks in the systems and processes once it is implemented. Previously they had indicated that enforcement would be tempered at least until the end of the year which gave us five months to fix problems and address processes that just didn’t work as planned. If full enforcement is still set for January, 2016, it is hard to believe that this delay really helped at all. In the meantime we can all breathe a sigh of relief, at least for now.
About The Author
rjbWalzak Consulting, Inc. was founded and is led by Rebecca Walzak, a leader in operational risk management programs in all areas of the consumer lending industry. In addition to consulting experience in mortgage banking, student lending and other types of consumer lending, she has hands on practical experience in these organizations as well as having held numerous positions from top to bottom of the consumer lending industry over the past 25 years.