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Now that the ink has dried on the Consumer Financial Protection Bureau’s (CFPB) finalized updates to its TILA-RESPA Integrated Disclosure (TRID) rule, more and more industry insiders are beginning to weigh in on the revised rule.
The Title Report sought reactions from companies that provide software platforms and other tools that facilitate the loan closing process for title agents and lenders, and are indirectly responsible for certifying TRID compliance.
While none seemed surprised by the contents of the final rule, some expressed disappointment that it does not go far enough in requiring that title fees be clearly stated; others said the optional compliance period may cause problems, as some lenders will immediately require compliance while others may postpone it until the deadline.
Earlier this month, CFPB issued its final update to TRID. Many in the industry had requested clarification, changes and further explanation of the 2015 regulation. Now that the final update has been released, the CFPB has set a mandatory compliance date of Oct. 1, 2018.
ClosingCorp Senior Counsel and Director of Compliance Michael Cremata said that although the CFPB took adequate time to carefully study its rule, its revised rule misses the mark in a few areas.
“One such area is the final rule’s failure to add meaningful guidance regarding the extent to which settlement service fees may be itemized on a Loan Estimate (LE) or Written List of Providers (WLP),” Cremata said.
“While the initial proposal included a helpful clarification that fees for certain ‘packages’ of settlement services may be aggregated, the bureau decided to drop this clarification from the final rule in favor of a comment clarifying that lenders need not include on the LE or WLP ‘related’ fees…not themselves required by the creditor…such as a notary fee, title search fee or other ancillary and administrative services.”
“Whether or not these fees are disclosed on the LE or WLP, though, the rule makes clear that they still must be included in tolerance calculations at closing. Therefore, in the context of 10 percent tolerance fees, no lender would intentionally exclude ‘related’ fees from the LE or WLP, and thus suffer a smaller ‘baseline’ for calculating tolerances (and that’s to say nothing of the context in which such fees are held to zero tolerance, in which case there’s no clarity at all as to how they would be treated for tolerance purposes),” Cremata added.
He called the CFPB’s refusal to address simultaneous issue rates, additional cure mechanisms and the so-called “black hole” disappointing.
SoftPro Director of Regulatory Compliance Leslie Wyatt said the final rule was what the industry expected based on the proposed amendments. She said the optional compliance period was not helpful to software providers.
“Actually, the optional period after 60 days only hurts us. One mandatory effective date, and no interim effective date is a much better option. We need to be prepared to provide the changes to our customers once a lender starts requiring compliance with the amendments,” Wyatt said.
“With an optional compliance date, various lenders can require settlement agents to provide updated documents while other lenders who wait to comply will require the current documents. Many software vendors may have to scramble to provide a temporary solution for those lenders that decide to comply with the changes prior to Oct. 1, 2018. It’s a lot of work on the settlement side of things as well as for software providers,” Wyatt explained.
She said it was too soon to say if the October compliance date provides enough time to make necessary changes. “It's hard to say right now, we are finalizing our review of the final amendments and the impact of those changes to our products,” Wyatt said.
Qualia CEO Nate Baker said optimizing TRID is a process that can’t be solved overnight but that he was “cautiously optimistic” about the amendments. He said software firms must make sure their technology is easily adaptable.
“CFPB graciously provided for more than ample time needed to incorporate the changes to settlement software systems. Anyone using technology that was developed before the introduction of TRID may have a small cause for concern due to how those systems update and the additional costs that will likely be passed on to them,” Baker said.
“However, we anticipate that most systems should be able to make the necessary changes on time, if not sooner. Qualia’s users will certainly receive the updates in time and with no added cost,” Baker added. “Qualia was purposefully designed after TRID to be able to adjust to changing legal landscapes (daily if need be) like no other settlement software on the market.”