When the Consumer Financial Protection Bureau (CFPB) announced several changes to the closing process that became effective in October, real estate agents and brokers had a few major concerns about the new rules.
The biggest initial concern involved delays to the closing process, but after TRID (TILA-RESPA Integrated Disclosures) rules were implemented on October 1 of last year, agents realized they had an entirely different problem: They sometimes could not access certain closing documents to review with their clients, including the new Closing Disclosure (CD).
On June 7, the National Association of Realtors (NAR) wrote a letter to the CFPB asking for a number of changes to TRID. “First up on NAR’s wish list is fixing what is probably the biggest complaint agents have about an unintended consequence of TRID,” wrote Inman reporter Amy Swinderman in June.
“Prior to TRID being enacted, real estate agents reviewed the HUD-1 with their clients to answer common questions about things like concessions, escrows, commissions and shares of prorated taxes, but since TRID became the law of the land, many lenders are refusing to share the new CD with them.”
It looks like the pleas have been heeded: Today, the CFPB announced proposed updates to TRID, including one that clarifies that lenders may share the CD with third parties.
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From NAR President Tom Salomone:
“Realtors have reported challenges gaining access to the Closing Disclosure ever since TRID went into effect, despite a long history of access to the substantively similar HUD-1,” said NAR President Tom Salomone in an emailed statement. “Today the CFPB acknowledged that concern by making it clear that it is appropriate and accepted for creditors and settlement agents to share the CD with consumers, sellers, and their agents.
“That’s a significant victory that will help Realtors continue to provide the expert service their clients have come to expect. We appreciate the CFPB’s willingness to reconsider the TRID-related challenges our members face and will continue to monitor the progress on this important issue in the months ahead.”
There are several proposed changes outlined, but the one affecting agents and brokers is categorized under the “privacy and sharing of information” piece of the regulation outlined in the CFPB’s release about the changes:
“The rule requires creditors to provide certain mortgage disclosures to the consumer,” read the release. “The Bureau has received many questions about sharing the disclosures provided to consumers with third parties to the transaction, including the seller and real estate brokers. The Bureau understands that it is usual, accepted and appropriate for creditors and settlement agents to provide a closing disclosure to consumers, sellers and their real estate brokers or other agents. The Bureau is proposing additional commentary to clarify how a creditor may provide separate disclosure forms to the consumer and the seller.”
NAR’s June letter mentioned one very important reason why agents and brokers might need to access the CD: “Since the rule was implemented, 54.5 percent of real estate professionals who were surveyed now have problems getting access to the Closing Disclosure,” wrote NAR in its letter to the CFPB. “Real estate professionals are even more likely to have issues getting access to the Closing Disclosure when settlement is delayed. When real estate professionals do get access to Closing Disclosures, 50 percent have reported finding missing concessions and incorrect names or addresses, incorrect fees, commissions, and taxes.”
In her story for Inman, Swinderman wrote that “Some investors are refusing to buy loans with even minor errors, even if the error doesn’t negatively impact a consumer or lead to material liability. Currently, minor errors can be corrected post-consummation within 30 days, but some investors are taking 60 days or longer to review and return loans to lenders, NAR said.
“Lenders then essentially have two choices: They can sell these loans on the ‘scratch and dent market’ and take a loss, or they can keep them on warehouse lines for who knows how long.”
Other recommendations made to the CFPB by NAR included extending the post-consummation correction timeline to 180 days and working more closely with due diligence firms and investors to educate them about common technical errors and salable loans.
The public is invited to comment on the suggested changes to TRID through October 18, 2016. You can see a full list of CFPB rulings open for comment and submit your own comment here.
Editor’s note: This story has been updated to note the comment period available on the suggested revisions to TRID.
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