The CFPB throws a bone to mortgage lenders

The CFPB throws a bone to mortgage lenders

TRID delay a favor to lenders?

April 7, 2016

Eight years now since the financial crisis but you would think we’re still in the midst of it with the way the Consumer Financial Protection Bureau treats the mortgage industry.

Many American’s lost almost everything when the market crashed, and those involved deserve legal punishment. What happened was wrong. No one is arguing that.

And there are still deceptive businesses out there that the industry needs a watchdog for, as seen here, here and here, and prior to the CFPB, there was no centralized place for individuals to file complaints about consumer financial products.

But the mentality that everyone in the mortgage industry is out to get the consumer has gone too far in the opposite direction.

It’s one thing to put the consumer first, but the bureau is suffocating the businesses that are trying to do just that.

The bureau is not quick to throw the industry a bone, and what it considers as helping was never with the intent to help the industry.

Twice a year, every year, since the CFPB was created, Director Richard Cordray is required to go before the Senate U.S. Senate Committee on Banking, Housing, and Urban Affairs.

In his opening remarks (found here), Cordray gave a thorough explanation of all the progress the bureau has made. Since the CFPB became a watchdog for consumers five years ago, it has obtained $11.2 billion in relief for 25 million people, a number that has skyrocketed from the $3.8 billion reported two years ago.

Included in his speech, Cordray boasts about the work the bureau has done in issuing regulations, along with modifying and clarifying a number of rules.

His first example: Clarifying amendments relating to small creditors and rural or underserved areas under Regulation Z, which, among other things, increased the number of financial institutions able to offer certain types of mortgages in rural and underserved areas.

So that one is a positive win for the industry, cool.

But then Corday decides to include in this list of wins moving the effective date of the Know Before You Owe mortgage disclosure rule to October 3, 2015.

Hold up. Let’s go back to the reasoning behind moving the TRID implementation date.

“We made this decision to correct an administrative error that we just discovered in meeting the requirements under federal law, which would have delayed the effective date of the rule by two weeks,” said CFPB Director Richard Cordray when the date was delayed.

“We further believe that the additional time included in the proposed effective date would better accommodate the interests of the many consumers and providers whose families will be busy with the transition to the new school year at that time,” added Cordray.

I wouldn’t define that as helping anyone.

While the latter point is for the consumer, the reasoning behind the delay, at its core, is because of an administrative error on their part.

Don’t forget that the Bureau actually delayed it till Oct. 1, and then realized that wasn’t the best idea and pushed it back to the official start date of Oct 3.

“The bureau further believes that scheduling the effective date on a Saturday may facilitate implementation by giving industry time over the weekend to launch new systems configurations and to test systems. A Saturday launch is also consistent with industry plans tied to the original effective date of Saturday, Aug. 1,” the bureau said when the rule was delayed.

The statement above is the first mention from the CFPB on helping those in the industry despite industry calls for a delay.

While Cordray may say his delay was them lending a helping hand, the battle on the ground isn’t over. A bill designed to give the mortgage industry more defined security on TRID implementation is still stuck in limbo after a series of attempts to get it passed.

And calls from concerned people in the industry on TRID enforcement are labeled an “overreaction” and reminded that examiners will be squarely focused on whether companies have made good faith efforts to come into compliance with the rule.

But CFPB, let’s not forgot that even you made very public mistakes (failing to file a legal document and leaving out a key words in a regulation) with little recourse on your actions.

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