Richard Horn, who led the final TRID rule while a Senior Counsel & Special Advisor in the Consumer Financial Protection Bureau’s Office of Regulations, is one of the foremost experts on TRID and other consumer finance laws and regulations. He is currently in private practice at Richard Horn Legal, PLLC.
It’s great working with my friends at Qualia to update you about what the Consumer Financial Protection Bureau was up to this past summer. Apparently no one at the CFPB took a summer vacation, because they were extraordinarily busy.
One of the most important things for our industry is that the CFPB finally issued its long-awaited TRID 2.0 final rule on July 7, 2017. The rule makes some substantive changes to the TRID rule that affect the work of title and escrow agents, such as allowing different methods of separating the consumer and seller CDs, changing how costs are itemized on the forms, changing some of the tolerance rules, and clarifying with whom the consumer and seller CDs can be shared.
While the mandatory compliance date for the rule is about a year away (it applies to applications received on or after Oct. 1, 2018), industry can begin complying with the rule’s provisions as they see fit beginning on October 10, 2017. This means that lenders may begin changing their processes and instructions on that date.
One important thing to note is that the rule, unfortunately, does not change the much-maligned “black hole” provision. Instead, the CFPB issued a new proposed rule to seek comment on a fix for the black hole. Comments are due on this new proposed rule on October 10, 2017.
Home Mortgage Disclosure Act
The CFPB also issued a final rule in August correcting its new Home Mortgage Disclosure Act (HMDA) rule, which it originally issued back in the fall of 2015. As you may know, the CFPB’s new HMDA rule requires lenders to report a substantial amount of new data for their loan applications, and originated and purchased loans, including new race and ethnicity, underwriting information, and information from the CD. The CFPB’s final rule made a multitude of corrections to the HMDA rule and temporarily increased the threshold for coverage of HELOCs to 500 for a period of two years.
The CFPB did not, however, delay the effective date of the new HMDA rule.
In addition, the CFPB issued its final arbitration rule, which was published on July 19, 2017. The rule prohibits consumer financial service providers from using arbitration clauses to bar consumers from class action lawsuits. The rule goes into effect for arbitration agreements entered into on or after March 19, 2018.
The rule applies to a multitude of consumer financial products and services, but significantly for the title insurance industry, the CFPB did not extend coverage of the rule to mortgage settlement services, such as title insurance. Although some public comments to the proposed rule suggested that the CFPB extend the rule to title insurance, the CFPB declined because it did not seek comment on the issue. Note, however, that mortgage loans are already subject to a mandatory arbitration prohibition. The Dodd-Frank Act prohibited arbitration agreements in residential mortgage loans, which the CFPB already implemented in Regulation Z.
Rumors were also flying this summer about whether Director Cordray would leave the CFPB in early September to begin a campaign for governor of Ohio. While the summer ended without an announcement by Cordray, he gave a campaign-style speech at the AFL-CIO Labor Day Picnic on September 4, in which he discussed general topics including income and wealth inequality. This has many still thinking that he plans to run.
Coming Up This Fall
But all of this activity this summer does not mean the fall will be any less busy. The CFPB’s rulemaking agenda includes work on other rules, including its proposed payday loan and debt collection rules, new overdraft disclosures, and a rule to begin supervision of the installment and vehicle title loan market.
CFPB is also reportedly busy with some significant enforcement activities, including a possible settlement with (or lawsuit against) a major real estate player, and investigations into a certain auto insurance scandal at a major bank. In addition to the CFPB’s activities, we are still waiting for the DC Circuit to issue its opinion in the PHH case. The court granted an en banc rehearing of the case and the hearing was held in May. There are important issues involved in this case, including whether the court agrees with the CFPB’s interpretation of RESPA section 8 and the constitutionality of the CFPB’s single-director structure. When the court issues its opinion, it will be a significant event in the industry, especially for those engaged in activities that fall under RESPA section 8.
It was a busy summer, and there will be a lot to keep track of this fall. Stay tuned!