Consumer Financial Protection Bureau (CFPB) Director Richard Cordray recently issued a warning to mortgage technology vendors for a lack of compliance with the CFPB’s TILA-RESPA Integrated Disclosure (TRID) Rule. Addressing the Mortgage Bankers Association’s Annual Convention and Expo, Cordray said he was “disturbed” by vendors’ lack of effort to implement the rule, despite having had two years to prepare for its implementation. He also suggested that other financial agencies should pay attention as well. “It may well be that all of the financial regulators, including the Consumer Bureau, need to devote greater attention to the unsatisfactory performance of these vendors and how they are affecting the financial marketplace.”
TRID, also known as the “Know Before You Owe” rule, was designed to provide consumers a clearer understanding of their homebuyers loans. Implementation of the rule, however, has not been as seamless as originally hoped. The rule’s effective date was originally set for August 2015 but was moved to October 1, and then later to October 3. The CFPB explained the scheduling change “may facilitate implementation by giving industry time over the weekend to launch new systems configurations and to test systems.” These concerns were echoed in a September 2015 memo from the American Bankers Association, which claimed that member banks’ “most immediate worry” was a delay in software systems necessary for compliance with the rule.
In his comments to the Mortgage Bankers Association, Cordray reiterated that the CFPB would take a “sensitive” approach to TRID compliance. He seemed to suggest that the CFPB was not likely to adopt a position of strict compliance with the new rule, at least during its early stages. Instead, the CFPB will be more principally focused on compliance efforts. Mr. Cordray explained that “examiners will be squarely focused on whether you have been making good-faith efforts to come into compliance with the rule.” However, it appears that CFPB is not pleased with the progress made by technology vendors since the rule’s October 3 “effective date.”